Embed Size (px)
Citation preview
Amended Complaint - 1
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Daniel F. Blackert, (SBN 255021) [email protected] Lisa J. Borodkin, (SBN 196412) [email protected] ASIA ECONOMIC INSTITUTE, LLC 11766 Wilshire Blvd., Suite 260 Los Angeles, CA 90025 Telephone (310) 806-3000 Facsimile (310) 826-4448 Attorneys for Plaintiffs Asia Economic Institute, LLC, Raymond Mobrez, and Iliana Llaneras
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
ASIA ECONOMIC INSTITUTE, LLC, a California LLC; RAYMOND MOBREZ an individual; and ILIANA LLANERAS, an individual, Plaintiffs, vs. XCENTRIC VENTURES, LLC, an Arizona LLC, doing business as BADBUSINESS BUREAU, RIPOFF REPORT, and RIPOFFREPORT.COM, BAD BUSINESS BUREAU, LLC, organized and existing under the laws of St. Kitts and Nevis, West Indies; EDWARD MAGEDSON an individual, also known as EDWARD MAGIDSON also known as the “Editor,” and DOES 1 through 100, inclusive, Defendants.
) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )
)))
Case No.: 2:10-cv-01360-SVW-PJW [PROPOSED] SECOND AMENDED
COMPLAINT FOR: (1) UNFAIR BUSINESS PRACTICES --
CAL. BUS. & PROF. CODE § 17200 et seq.
(2) DEFAMATION (3) DEFAMATION PER SE (4) INTENTIONAL INTERFERENCE
WITH PROSPECTIVE ECONOMIC RELATIONS
(5) NEGLIGENT INTERFERENCE WITH PROSPECTIVE ECONOMIC RELATIONS
(6) NEGLIGENT INTERFERENCE WITH ECONOMIC RELATIONS
(7) DECEIT (8) FRAUD (9) INJUNCTION
JURY TRIAL DEMANDED
Asia Economic Institute et al v. Xcentric Ventures LLC et al Doc. 117 Att. 1
Dockets.Justia.com
Amended Complaint - 2
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Plaintiffs Asia Economic Institute, LLC (“Asia Economic Institute” or
“AEI”), Raymond Mobrez (“Mobrez”) and Iliana Llaneras (“Llaneras”)
(collectively, “Plaintiffs”) complain of defendants Xcentric Ventures, LLC doing
business as Ripoff Report, Bad Business Bureau, RipoffReport.com and
BadbusinessBureau.com (“Xcentric”), Bad Business Bureau LLC (“Bad Business
Bureau”) and Edward Magedson, also known as Ed Magedson, also known as
Edward Magidson, also known as “the EDitor” (“Magedson”) (collectively,
“Defendants”), and alleges as follows:
I.
JURISDICTION AND VENUE
1. This action arises under California law and the amount in controversy
exceeds the jurisdictional minimum of this Court.
2. Jurisdiction is proper pursuant to Cal. Civ. Pro. Code § 410.10. Each
Defendant has sufficient minimum contacts with California, is a citizen of
California, or otherwise purposefully avails itself of benefits from California or
doing business in California so as to render the exercise of jurisdiction over it by
the California courts consistent with traditional notions of fair play and substantial
justice.
3. Specifically, this Court has personal jurisdiction over Defendants because
of the following:
a. In an email from Defendant, Magedson to Plaintiff, Mobrez, Magedson claims to reside in California;
b. Defendants solicit donations from individuals and businesses in California;
c. Defendants have received donations from individuals and businesses in California;
d. Users of Defendants’ websites reside in California; e. Individuals and businesses in California have purchased merchandise
from Defendants’ websites; f. Defendants sell advertising space to businesses located in California; g. Individuals and businesses located in California have and continue to
be enrolled in the CAP program; and
Amended Complaint - 3
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
h. Defendants’ legal directory –located on Defendants’ websites- posts a listing of California attorneys who will litigate lawsuits (mostly class actions) for individuals and business who have allegedly been ripped off.
4. Venue is proper pursuant to Cal. Civ. Pro. Code § 395. Defendants’
obligation and liability arises in this county because Defendant’s unlawful
conduct substantially occurs in this judicial district and Defendants solicit
and engage in business within this judicial district.
II.
THE PARTIES
1. Plaintiff Asia Economic Institute is a limited liability company and, at
all times relevant hereto, organized and existing pursuant to the laws of the State of
California, and is authorized to do business in the State of California. Plaintiff Asia
Economic Institute has its principal place of business at 11766 Wilshire Boulevard,
Suite 260, Los Angeles, California 90025. AEI is currently in business however
has been unable to generate any income due to the defamatory reports appearing on
Defendants websites.
2. Plaintiff Mobrez is an individual and, at all times relevant hereto, a
resident of Los Angeles, California, County of Los Angeles. Plaintiff Mobrez is a
principal and manager of Asia Economic Institute, LLC. In addition, as a
California-licensed broker, Mr. Mobrez derives a significant amount of revenue
from brokering commercial real estate transactions.
3. Plaintiff Llaneras is an individual and, at all times relevant hereto, a resident of California, County of Los Angeles. Plaintiff Llaneras is a principal and manager of Asia Economic Institute, LLC. In addition, as a California-licensed broker, Ms. Llaneras derives a significant amount of revenue from brokering commercial real estate transactions.
4. Defendant Xcentric is a limited liability company organized and
existing pursuant to the laws of the State of Arizona with its purported domestic
address as P.O. Box 470, Phoenix, Arizona 85280. Plaintiffs are informed and
believe and thereon allege that Xcentric is owned by a single member, Creative
Business Investment Concepts, Inc., a Nevada corporation located at 2533 North
Amended Complaint - 4
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Carson Street, Carson City, Nevada 89706. Defendant Xcentric transacts business
in interstate commerce as, inter alia, “Ripoff Report,” an enterprise, located in this
judicial district and elsewhere in California and Arizona, and employs, contracts
with and engages individuals, partnerships and business entities, who share the
common goals of perpetuating the goals and purpose of the Ripoff Report
enterprise, pursuant to long-term relationships, drawing from the same pool of
associates and spanning several years, from at least 2005 to the present, and
sharing in the substantial financial and other benefits derived therefrom.
5. Plaintiffs are informed and believe and thereon allege that Xcentric
operates or manages the Ripoff Report enterprise and substantially directs many of
its activities and operations, including selling goods and services; acquiring
exclusive, perpetual, world-wide copyrights in original text and graphical content
about businesses, consumer goods and services, as well as the intimate personal
lives of private individuals, in the form of “reports” (“Rip-off Reports” or
“Reports”),1 “rebuttals” and “comments”; writing and producing original, paid,
sponsored endorsements and testimonials of consumer businesses, goods and
services – often substantially co-written by the subjects themselves – as
“investigations” and “notices”; thereafter distributing, displaying, publishing,
continuously republishing, indexing, and optimizing for the Web such acquired
and paid, self-produced content to make the content interactive and easily
searchable by commercial Internet search engines; advertising against such
acquired and self-produced, paid content, deriving revenues based in part on
demonstrated analytics including numbers of unique visitors, page views and ad
clicks; attracting visitors to its website for the purpose of selling them goods and
services, increasing its analytics, enhancing the website’s “authority” or
“reputation” with Internet search engines, and soliciting additional content to add
1 For avoidance of confusion, Defendants’ business is referred to herein as “Ripoff Report”
while the reports themselves are referred to as “Rip-off Reports” or “Reports.”
Amended Complaint - 5
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
to its massive compilation of business, consumer and personal data; and creating,
modifying, customizing or licensing software code, database architecture, network
and computer programming. In operating or managing the Ripoff Report
enterprise, Xcentric uses instrumentalities of interstate commerce, specifically
wire, including through websites hosted at the domain names “ripoffreport.com,”
“badbusinessbureau.com,” “ripoffreport.net” and “ripoffreport.org,” among others,
all of which redirect to the Uniform Resource Locator (“URL”) for Defendants’
primary website, http://www.ripoffreport.com (the “ROR Website”, sometimes
“ROR”) and self-hosted electronic mail services operated through the
“ripoffreport.com” domain name. Plaintiffs are informed and believe and thereon
allege that the domain names for the ROR Website and electronic mail services are
registered by directNIC, located at West Bay, Grand Cayman, hosted by
Intercosmos Media Group, Inc. with servers located in Ankara, Turkey, and
directed, operated and controlled from Maricopa County, Arizona.
6. Plaintiffs are informed and believe and thereon allege that Defendant
Bad Business Bureau is, or was at times relevant hereto, a limited liability
company organized and existing pursuant to the laws of Saint Kitts or Nevis, West
Indies. Defendant Bad Business Bureau is or was the predecessor to Xcentric in
operating and managing the Ripoff Report enterprise and is or was otherwise
associated with the Ripoff Report enterprise.
7. Defendant Edward Magedson, also known as Ed Magedson, also
known as Edward Magidson, also known as “the EDitor (“Magedson”) is an
individual and, at all times relevant hereto, a resident of the State of Arizona and/or
the State of California and, by his own admission, represented himself at certain
times relevant hereto as present in the State of California. Magedson is the
Manager of Xcentric and Bad Business Bureau, the “Editor” of Ripoff Report and
operates and manages activities of the Ripoff Report enterprise, including by, inter
alia, making top-level policy, business, risk management, legal and strategy
decisions, sometimes in consultation with outside counsel; operating and managing
Amended Complaint - 6
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
business conducted through the ROR Website; administering its Corporate
Advocacy and Remediation Program; performing investigations of the veracity of
the contents of certain reports; writing and publishing findings; collaborating with
the subjects of paid testimonials and endorsements in writing original content
about them and publishing it through the ROR Website; communicating with
individual subjects of reports by electronic mail, particularly to urge them to file
rebuttals or comments to existing Reports; supervising or acting in association with
a currently unknown individual identified only by the electronic mail address
“[email protected]” at certain times relevant herein, whose duties included
responding to complaints that rebuttals were not posting or were being posted to
the wrong reports; engaging, supervising and collaborating with counsel to draft
significant and influential portions of the ROR Website and otherwise. Magedson
uses instrumentalities of interstate commerce to conduct these activities,
specifically wire.
8. Xcentric and its associates in the Ripoff Report enterprise use
extremely aggressive litigation strategies to, inter alia, protect and perpetuate its
business model, and silence and retaliate against their critics, including by
affirmatively initiating an Arizona state court action against Washington State-
based attorney and search engine optimization consultant and blogger Sarah L.
Bird, Xcentric Ventures LLC v. Bird, (D. Ariz. 09-cv-1033) which action was
dismissed on jurisdictional grounds and is currently on appeal to the Ninth Circuit
Court of Appeals (10-1546); initiating an Arizona state court defamation action
against Phoenix New Times reporter Sarah Fenske, her husband, a source for an
article, the source’s spouse and the publishers, Xcentric v. Village Voice Media,
CV2008-2416 (Arizona Sup. Ct. for Maricopa County); and is currently opposing
an appeal to the Seventh Circuit (10-1167) in Blockowicz v. Williams, 675 F.
Supp. 2d 912 (N.D. Ill. 2009) (09-cv-3955) regarding its purported right to defy
compliance with a permanent injunction ordering it to remove defamatory content.
Amended Complaint - 7
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
9. The Ripoff Report enterprise until approximately May or June 2010
had a regular business practice of secretly recording or causing to be recorded all
telephone conversations to its business telephone number, in association with an
unidentified vendor, without disclosure to or consent of all parties to the telephone
conversations, in violation of, inter alia, the wiretapping laws of the State of
California. The Ripoff Report has used or attempted to use the contents of such
secret recordings as a surprise litigation tactic in actions in, inter alia, California
and Arizona. Defendants used instrumentalities of interstate commerce,
specifically wire, to record such telephone calls.
10. The true names and capacities, whether individual, corporate, or
otherwise, of Defendants DOES 1 to 100 are unknown to Plaintiffs at the present
time, which therefore sue such Defendants by fictitious names, and will amend this
Complaint to show their true names and capacities when ascertained. Plaintiffs are
informed and believe and thereon allege that each of the defendants assigned as a
DOE is responsible in some manner for the events and happenings herein referred
to, and thereby proximately caused injuries and damages to the Plaintiffs. Plaintiffs
will amend this complaint to add as defendants in this action those individuals and
entities who have assisted Defendants in perpetrating the acts and omissions
complained of herein, including additional individuals and entities complicit in
managing and operating the affairs of the Ripoff Report enterprise.
III.
SUMMARY OF THE ALLEGATIONS
11. The Ripoff Report enterprise takes advantage of the average person’s
lack of sophistication in technology, reliance on Internet search engines, and
general lack of time. It misrepresents its true nature to the public and places its
victims in desperate positions through elaborate technological and legal traps and
artifices. It then intimidates and defrauds its victims into believing that the only
Amended Complaint - 8
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
practical way of saving their good names is to defend them on its home turf, the
ROR Website, where it makes the rules, it decides who gets heard, and most of all,
it makes money. Many do, not realizing until it is too late, that they are only
aggravating their injuries and enriching Defendants by doing so.
12. The Ripoff Report enterprise is the ultimate Internet “troll.”2 It
survives and earns revenues through a fraudulent scheme (the “Content Trolling
Scheme”) by building a huge database of controversial content about other people
and businesses (“victims” or “subjects”), which it then enhances for search engines
and advertisers, often with additions from the victims themselves. The Ripoff
Report enterprise runs the Content Trolling Scheme by tricking its victims through
various misrepresentations of material fact conveyed through the ROR Website
and in electronic mail, and otherwise furthered by use of the wires, into believing
there is no legal redress for them in the courts, that the Reports will forever remain
as a “Scarlet Letter” on their permanent records, and that their best available option
is to file a rebuttal.
13. The Ripoff Report enterprise solicits purely negative, often hateful
and extremely personal – and in many instances, judicially recognized as
defamatory – content in the form of Rip-off Reports. The Ripoff Report enterprise
acquires ownership of all content contributed through the ROR Website under an
exclusive grant of copyright before it is ever published to the web. Before
publishing Reports, the Ripoff Report enterprise conducts its own-pre-publication
review, whereby it filters out the positive and publishes only the negative,
sometimes redacting or disclaiming portions of the content, at times in a manner
that significantly changes its meaning, and in certain cases (often under a financial
2 Wikipedia defines an Internet troll as “someone who posts inflammatory, extraneous, or off-
topic messages in an online community, such as an online discussion forum, chat room, or blog
with the primary intent of provoking other users into a desired emotional response.”
Amended Complaint - 9
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
arrangement) adds additional content that completely transforms or negates its
meaning, or, for a fee, suppresses the Reports from publication altogether.
14. Cloaked in the false disguise of a consumer advocate, the Ripoff
Report enterprise purports to advise the victims of the Content Trolling Scheme
that the “best” thing they can do is to file a “free” rebuttal. Unbeknownst to the
victims, the “free” rebuttals come at a cost. A rebuttal is likely to make the
negative content in a Report go up in page rank in search engine queries, while
doing nothing to alter the snippets of negative content that appear as search results.
The Ripoff Report enterprise does not disclose its own financial self-interest in
having victims file rebuttals –fresh content and page visits that make the ROR
Website more attractive to search engines and online advertisers. The Ripoff
Report enterprise does not disclose that some Reports do come down, and are
materially altered or suppressed, for a price. Without knowing all this, the victims
file rebuttals. The Ripoff Report enterprise then leads its victims down a path
toward applying for the Corporate Advocacy Program, which promises to turn a
negative into a positive, and seeking either exorbitant fees or tax returns and
personal information, and conditioning acceptance in to the program on repeated
“admissions of responsibility” more akin to the Salem Witch Trials or Spanish
Inquisition than an outsourced customer satisfaction program.
15. By the time the victims realize that the best way of dealing with a
Report may be to let it sink to the bottom over time, the damage has often been
done. The victims have sat on their rights, business has evaporated, houses have
gone into foreclosure, and the Reports have been pushed so far up in page rankings
that it takes significant additional money and time to post alternative, positive
content about themselves to the Web to undo the damage to their online
reputations.
16. The Ripoff Report enterprise profusely claims that “Reports” never
come down. But, for a price, the Ripoff Report enterprise will sell something even
more valuable – the opportunity to change a negative Google search engine result
Amended Complaint - 10
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
into a positive. The Ripoff Report enterprise markets the Corporate Advocacy
Program (“CAP”) to the subjects of Reports, typically after strongly urging them to
file rebuttals. By joining CAP or otherwise making financial arrangements with
the Ripoff Report enterprise, a subject can buy the privilege of essentially writing
(or approving) her own Google search result. The CAP member writes or approves
between 250 and 350 additional words of positive content that will be inserted into
the body of a Report and also in a known strategic location in the HTML for the
Report. 250 words is just the right amount of text to push the surrounding negative
content so far down in the HTML as to be irrelevant to search engines. Thus,
negative content virtually disappears from the Google search results for CAP
members, replaced by the words approved by the CAP member. Because Google’s
search algorithms are generally influenced to select text that “matches,” between
both a web page and the corresponding HTML (that is, identical text that is present
in both), putting the positive content in the strategic location in the HTML, along
with a matching block of test in the Report effectively negates the harmful effect of
the Report with the Google search engine, while allowing Defendants to continue
claiming (falsely) that they “never remove Reports.”
17. There are at least two ways to get into CAP. One is to follow the
application process, admit fault, sign away important legal rights, and pay
exorbitant prices starting at thousands of dollars over a three-year period. The other
way is to sue Defendants. In order to preserve the fiction that they “never lose a
case” and that plaintiffs pay all their attorneys’ fees, the Ripoff Report enterprise
sometimes settles difficult cases by channeling the plaintiffs into CAP or similar
arrangements.
IV.
Amended Complaint - 11
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
FACTUAL ALLEGATIONS COMMON TO ALL CLAIMS
A. Defendants’ Business and the ROR Website
18. Defendants Xcentric, Bad Business Bureau and Magedson, doing
business as “Bad Business Bureau” and “Ripoff Report,” together and in
association with other individuals, partnerships and business entities, including
employees, contractors, consultants, counsel, service providers and other
participants, acting with a common purpose, pursuant to relationships among those
associated with the Ripoff Report enterprise, with longevity sufficient to pursue the
purposes of the Ripoff Report enterprise, operate and manage the affairs of the
Ripoff Report enterprise, often through the ROR Website.
19. Defendants control other domain names that redirect visitors to the
ROR Website, including, inter alia, ripoffreport.net, ripoffreport.org, and
badbusinessbureau.com. The Ripoff Report enterprise transacts a substantial
amount of its affairs through the domain name “ripoffreport.com,” both through
the ROR Website and through electronic mail emanating from email addresses
including [email protected], [email protected] and
20. The Ripoff Report enterprise must be viewed for what it is – a self-
interested business model, not a disinterested consumer advocacy or consumer-
protection, public service. The Ripoff Report enterprise is a for-profit business.
The Ripoff Report enterprise earns revenues from the sale of goods and services
and Web-based advertisements, which generate revenues based in part upon
analytics including, Internet visitor traffic, page visits, page views, length of visit,
number of clicks on advertisements and links, and link referrals to paid
advertisements, whether under a revenue-sharing agreement or fee for advertising
model.
Amended Complaint - 12
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
21. The Ripoff Report enterprise uses instrumentalities of interstate
commerce, specifically wire, to further its purposes, including conducting the
“Content Trolling Scheme” and other schemes that protect its revenues and power.
22. The Ripoff Report enterprise conducts its “trolling” on two levels.
One is on the visible, superficial level of what it publishes on web pages at the
ROR website, in the contents of the Reports, rebuttals, comments, advertisements
and editorials. The Ripoff Report enterprise painstakingly frames any legal
challenge to its practices solely as a challenge to its conduct on this first, visible,
two-dimensional plane.
23. However, the true, three-dimensional space in which the Ripoff
Report enterprise conducts its “trolling” for content, page views and visitors occurs
on the level of the dynamic, semantic computer code that makes the first level of
content searchable and interactive. For each web page comprising the ROR
Website, there is an accompanying page of Hypertext Markup Language code
(“HTML”). The HTML for a web page is responsible for generating what people
see on their Internet browsers, influences how the page ranks with search engines,
and influences what appears in the snippets of content displayed as search engine
results, which is often the public’s first impression of any web page on the Internet.
24. The Ripoff Report enterprise determines not only what goes into web
pages, but also what goes into the HTML, by design and continual improvement of
its database, user interface and system architecture.
25. The Ripoff Report enterprise has designed its systems to generate web
pages from content it acquires, and also the HTML for such web pages. Simply
put, the web pages are written in plain, generally understandable English language,
readily visible and comprehensible to a web visitor of ordinary sophistication.
26. The HTML for such web pages is written in dynamic, semantic
computer code, using generally accepted elements that express intentions, ideas
and conduct readily understandable to a person of moderate to advanced
Amended Complaint - 13
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
sophistication in HTML, but likely not visible, noticeable to a casual Google
searcher making snap impressions based on a few search results.
27. The Ripoff Report enterprise knowingly, deliberately and with intent
to deceive, exploits the gap between web pages and their respective HTML. The
Ripoff Report enterprise has designed its servers and databases so that for ordinary
Reports, the “matching” text in the body of the web page and the header of the
HTML is generally negative, combined with the subject’s name as keywords.
28. However, for money, the Ripoff Report Enterprise will allow a subject
to rewrite the “matching” portion of text that will be identical in the Report and in
the HTML, and thus influencing Google to display a positive search result for the
subject.
29. An advertising-supported Internet business model such as the Ripoff
Report enterprise supports itself and earns revenues by attracting visitors to the
content it publishes on the Web. As an advertising-supported business, the Ripoff
Report enterprise must constantly acquire or generate content that will attract
visitors. Therefore, like many Internet-based content publishers, the Ripoff Report
enterprise aggressively solicits original content in the form of contributions or
submissions and generates original content of its own, for publication and
continual republication, for the purpose of advertising against it.
30. The ROR Website comprises over 500,000 unique web pages
organized and hosted through the domain name ripoffreport.com and stored on
servers owned or controlled by the Ripoff Report enterprise. The Ripoff Report
enterprise copiously represents through the ROR Website, in electronic mail and in
filings in the public records that it does not remove, depublish or delete content
from its database. Therefore, the amassed stored content owned by the Ripoff
Report enterprise is constantly increasing, thereby increasing the total number of
web pages comprising the ROR website and associated database, and thereby
increasing opportunities for attracting visitors to the ROR website to which it can
Amended Complaint - 14
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
serve advertisements, and in turn enhancing the various analytics that determine
the advertising revenues that the Ripoff Report enterprise can earn.
31. The ROR Website gains so-called “authority,” or favorable page
ranking, with Internet search engines based on a numbers of factors. These include
the overall number of web pages, the quality of the content and links, the more
fresh content it posts, the more often it is linked to, and the more frequently its
content is updated, including by comments and “rebuttals.”
32. In addition to selling two-dimensional advertisements on its static web
pages, Ripoff Report also sells links to paid advertisements in the body of the
“rebuttals” that users post to its web pages.
33. Ripoff Reports offers programs such as the “Verified Safe” program,
under the tagline “businesses you can trust!” and the “Corporate Advocacy
Program,” described as a “Business Remediation and Consumer Satisfaction
Program. . . . a long name for a program that does a lot for both the consumer and
businesses alike.”
34. While the goals of consumer self-help, providing a place to report
scams and rip-offs and generally exercising First Amendment-protected “pure
expressive speech” rights are noble, Ripoff Report does much more, behind the
scenes, that destroys livelihoods, reputations and businesses.
B. Rip-Off Reports and the ROR Website’s Terms of Service
35. As part of the Content Trolling Scheme, the Ripoff Report enterprise
holds the ROR Website out to the public and in judicial tribunals as a consumer
review website or public discussion forum.
36. Ripoff Report purports to serve the public as “by consumers, for
consumers,” urging the public to contribute reports of “scams, consumer
complaints, and frauds” under mottos such as “Let the truth be known!” These
reports are referred to hereinafter as “Rip-off Reports” or “Reports.
Amended Complaint - 15
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
37. The ROR Website will not publish positive reviews. The only positive
material that can be posted are rebuttals and comments.
38. Not all Rip-off Reports are about companies with shady business
practices or individuals engaging in fraud or deceit. The ROR Website hosts, and
has hosted “Rip-off Reports” concerning the deeply private details of the lives,
habits and health conditions of individuals, including purported reports of
individuals’ alleged “mental health” problems, attributing to individuals “sexually
transmitted diseases,” “substance abuse” habits and other deeply personal, private
details, along with names and home addresses.
39. The ROR Website differs from other community websites or public
discussion forums in several unusual ways. Ripoff Report does not merely host the
Rip-off Reports. Ripoff Report takes ownership of the copyright of every Report,
rebuttal and user comment before it is even published to the Web, under the
Copyright Act, 17 U.S.C. § 101. Thus, at the time of publication, Ripoff Report is
the exclusive owner of all content that is posted to the ROR Website.
40. This is because, unlike community websites such as Facebook,
Craigslist, and Roommates.com, Ripoff Report makes it mandatory for a user
wishing to contribute content to the ROR Website to register and accept the ROR
Website’s Terms of Service, which requires an automatic, exclusive grant of
copyright in all user submissions to Ripoff Report before the user can contribute.
41. A true and correct copy of the ROR Website’s Terms of Service, as
they existed on April 3, 2009 (and identical today with respect to Paragraph 6) are
attached as Exhibit “1” and is incorporated herein by this reference. Paragraph 6
of the ROR Website’s Terms of Service provides that a user wishing to use the site
grants Ripoff Report an irrevocable, perpetual, exclusive, world-wide license for
certain rights exclusive to copyright holders, before they can post anything to a
public area:
“6. Proprietary Rights/Grant of Exclusive Rights
Amended Complaint - 16
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
By posting information or content to any public area of
www.RipoffReport.com, you automatically grant, and you represent and
warrant that you have the right to grant, to Xcentric an irrevocable,
perpetual, fully-paid, worldwide exclusive license to use, copy, perform,
display and distribute such information and content and to prepare derivative
works of, or incorporate into other works, such information and content, and
to grant and authorize sublicenses of the foregoing.”
Exhibit 1, Paragraph 6.
42. Because the rights to copy, display, perform, and prepare derivative
works are among the exclusive rights comprised in a copyright, and Paragraph 6 of
the ROR Website’s Terms of Service is an exclusive license of these rights,
Paragraph 6 of the ROR Website’s Terms of Service constitutes a “transfer of
copyright ownership”3 with respect to all user contributions, under the Copyright
Act, 17 U.S.C. § 101.
43. Because all user-generated submissions are screened (and sometimes
altered) by Ripoff Report’s content monitors before they are posted to the ROR
Website, and because copyrighted works are “created” when they are first fixed in
any method that is sufficiently stable that they can be perceived, reproduced or
communicated, under the definitions of the Copyright Act, 17 U.S.C. § 101, Ripoff
Report has already acquired exclusive copyright ownership of all user-submitted
content before it is published to the Web.
3 In “Definitions” of the Copyright Act, a “transfer of copyright ownership”
is defined as “an assignment, mortgage, exclusive l icense , or any other
conveyance, alienation, or hypothecation of a copyr ight or of any of the
exclusive rights comprised in a copyright , whether or not it is limited in
time or place of effect, but not including a nonexc lusive license.” 17
U.S.C. § 101.
Amended Complaint - 17
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
44. Websites Facebook,4 Craigslist,5 Roommates.com6 and most
standard community websites only require users to agree to grant a non-exclusive
license for user content. By contrast, Ripoff Report owns the perpetual, exclusive,
worldwide copyright in and to every single item of content any user has
contributed to the ROR Website, even before it is posted to the Web.
45. Moreover, unlike community forums such as Facebook or Craigslist,
Ripoff Report embeds links into the contents of user-submitted material for paid
advertisements for sometimes unrelated advertisers like “Cash4Gold.”
C. ROR Website’s Rebuttal and Commenting System
46. Ripoff Report does not allow users to post positive Reports about a
business or individual on the ROR Website. Ripoff Report’s content monitors
review Reports before they are posted to filter out those that say positive things
about a business.
4 “you grant us a non-exclusive, transferable, subli censable, royalty-free,
worldwide license to use any IP content that you po st . . . This IP License
ends when you delete your IP content or your accoun t . . .” (Facebook
Statement of Rights and Responsibilities Last Revis ion April 22, 2010)
5 “you automatically grant . . . to craigslist an ir revocable, perpetual, non-
exclusive, fully paid, worldwide license to use, co py, perform, display and
distribute said Content. . .” (Craigslist Terms of Service, July 24, 2010)
6 “with respect to Content you submit . . . you gran t us the following world-
wide, royalty-free and non-exclusive license(s) . . . the license to use,
distribute, reproduce, modify, adapt, publicly perf orm and publicly display
such Content . . . “ (Roommates.com Terms of Servic e as of July 24, 2010)
Amended Complaint - 18
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
47. Instead, Ripoff Reports restricts subjects wishing to defend
themselves or others identified in a Report to placing such comments in a
“rebuttal” or as a “comment” to a Rip-off Report.
48. Rebuttals and comments are placed in a less prominent position than
the Reports. They are in smaller type, and lower down the screen, than the headers
and main body of Rip-off Reports.
49. Ripoff Report also has designed the ROR Website with various
technical restrictions that make it much more difficult to reproduce, memorialize or
share the rebuttal and comment sections purportedly attached to the Reports.
50. Attempts to print a Rip-off Report directly from a standard web
browser such as Firefox will only print the negative Rip-off Report and sidebar
advertising, and will not print the purportedly associated rebuttals and comments.
D. Ripoff Report’s Commercial Goods and Services
51. Ripoff Report is a business. In addition to being in the business of
attracting visitors to the ROR Website and advertising against the resulting visitor
traffic analytics, selling paid advertising links and banner and sidebar
advertisements, Ripoff Report directly vends goods and services in interstate
commerce through the wires by means of, inter alia, the ROR Website and emails.
52. Among the goods Ripoff Report sells is a book, pamphlet or guide
called the “Rip-Off Report.com Do-It-Yourself Guide: How to Get Rip-off
Revenge.” This book is offered for sale in the United States for $21.95.
53. Purchasing this book is actually “Step Two” in following the ROR
Website’s “How to Get Rip-Off Revenge” instructions. Step One is to file a
detailed Rip-Off Report at the ROR Website.
54. At all times relevant herein, and since at least 2005, Ripoff Report has
offered and offers for sale, through the ROR Website and through emails in
Amended Complaint - 19
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
interstate commerce a program called the “Corporate Advocacy Program”
(sometimes herein, “CAP”).
55. Defendants describe CAP as “where a business may publicize its
proactive approach to addressing . . . complaints.” Defendants insist that “all
businesses will get complaints, but how those businesses handle those complaints
separates good business from bad business.” Defendants advertise to the public
that that CAP “demonstrate[es] yours is an honest business, with integrity, and
willing to make a commitment to righting consumer wrongs.”
56. In or around April 2010, Defendants also introduced the “Ripoff
Report Verified Safe” program. Defendants advertise, with reference to CAP,
“This program now includes – Ripoff Report Verified.”
57. The ROR Website depicts a logo for the Ripoff Report Verified Safe
program comprising a stylized figure of a person wearing a necktie with a halo
floating above, and a checkmark in a box, together with the tagline “businesses you
can trust!”
58. Defendants advertise that this Verified Safe Program “also includes a
commitment to Ripoff Report Corporate Advocacy Business Remediation and
Customer Satisfaction Program,” which is CAP. Defendants advertise CAP as “a
program that benefits the consumer, assures them of complete satisfaction and
confidence when doing business with a member business.”
59. The web page on the ROR Website dedicated to the “Ripoff Report
Verified Safe” program represents, in hyperlinked text, that “Advertisers have met
our strict standards for business conduct. Clicking on that hyperlinked text directs
the viewer to another web page located at the URL
http://www.ripoffreport.com/ConsumersSayThankYou/AdvertisingStandards.aspx
and titled “About Us: Advertising Standards.”
60. On the “About Us: Advertising Standards” web page of the ROR
Website, Defendants state that they ensure an advertiser is “Scam-free and has no
Amended Complaint - 20
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
outstanding reports filed against them.” This implies that having “outstanding
Reports” on the ROR Website means a business cannot be trusted.
E. Ripoff Report’s Relationship with Search Engines and HTML
61. In order to truly understand the nature of the harm and destruction
wrought by Defendants, it is critical to recognize the importance of search
technology in the modern use of the Internet.
62. Search is currently the most powerful, vibrant determinant in the way
people use the Internet today. The global search advertising market was a reported
$6.2 Billion in the second quarter of 2010.7 Google, which reported a total market
capitalization of $36 Billion in 2009, rose to prominence by making the Internet
searchable.
63. Courts have long recognized the importance of search as a means for
users to locate information or consume content of interest on the Web. In 2000, the
Court in Bihari v. Gross, 119 F. Supp. 2d 309, 312 (S.D.N.Y. 2000) wrote of
search:
“Because entering the company's name as the domain name often fails to
take the user to the desired webpage, many users prefer the . . . search
technique. Here, a websurfer enters a particular company name or search
request in a search engine. The search engine then displays a list of websites
that match the user's request. The search engine ranks the relevant sites
according to the relative frequency with which the word or phrase appears in
7 Source: Investor Business Times, “Google search share slips, Baidu gains: report” (July 23, 2010).
Amended Complaint - 21
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
the metatags and in the text of the websites. The websurfer then chooses,
based on any number of considerations, which website to visit.”
Bihari v. Gross, 119 F. Supp. 2d 309, 312 (S.D.N.Y. 2000).
64. Many members of the public influenced by a Rip-off Report do not
locate it by navigating to the ROR Website by domain name -- ripoffreport.com --
and then searching the ROR Website for a company or a person.
65. Instead, many -- if not most -- discover Rip-off Reports by searching
for that company or person on the Web generally, by entering the name of that
company or a person as a query in a search engine such as Google and then
viewing the web pages returned in response to the search query.
66. The public often does not type in unique web addresses or "URLs”
into address bars in their browsers. Instead, it is much more convenient and often
faster to type in a query to the search pane of a browser or enter a search query into
one of the major search engines: Google.com, Yahoo.com, or Bing.com. See
Declaration of Joe Reed, attached as Exhibit “2” and Declaration of Anthony
Howard attached as Exhibit “3.”
67. Defendants’ conduct herein encompasses their affirmative activity
directed at search engines through the HTML which they cause to be designed,
written, generated and published for each unique web page comprising the ROR
Website. Thus, the Ripoff Report enterprise communicates with the public by
shaping the HTML and Report texts in ways that it knows will influence search
results to appear in certain, predictable ways.
68. HTML is the language of expression for individual web pages that are
published to the web. The ROR Website comprises an estimated over 500,000
unique web pages, by Defendants’ admission.
69. HTML determines not only how a web page is formatted to a viewer,
but also influences how a page is located and displayed in response to a search
engine query. Among other things, a web page’s HTML influences (1) the order in
which a search engine query returns and displays results for a particular web page
Amended Complaint - 22
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
(“page rank”) and (2) how the description of the web page returned by the search
query appears (“search result”).
70. It is well-recognized that a party can be held liable for damages
proximately caused by writing or causing computer software, computer code, or
HTML to the extent it influences the public through a search engine.
71. Courts have long held parties accountable for their deliberate conduct
expressed in HTML and aimed at the intermediate space between the front, or
user-facing, side of a Website, and the “back end” of a website.
72. Courts regularly enjoin parties to refrain from infringing trademarks
through inserting infringing terms in the description and keyword metatags of
HTML, and find such inclusion of infringing terms in metatags to be actionable
infringement, even where the HTML is not immediately visible to the viewer. See,
e.g., Brookfield Communs. v. W. Coast Entm't Corp., 174 F.3d 1036, 1065 (9th
Cir. Cal. 1999).
73. Courts have also recognized that computer code can qualify as
“speech,” inasmuch as it is readable by humans and computer programmers
“communicating ideas to one another almost inevitably communicate in code,
much as musicians use notes.” Universal City Studios v. Corley, 273 F.3d 429, 448
(2d Cir. 2001).
74. Thus, Courts have long recognized the power and impression of
search results on a user surfing the Web, and held parties accountable for what they
write in HTML.
75. The business model of commercial search engine companies such as
Google, Yahoo and Microsoft’s Bing is an advertiser-supported one.
76. The underlying business model of such search engine companies is
the delivery of online advertising to as many users as possible. Websites that have
more visitors create greater opportunities for a search engine company to deliver
online advertisements.
Amended Complaint - 23
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
77. A typical search engine user begins by entering a query, or
“keywords” into a field in the search engine’s website or perhaps in Web browser
bar. After a user enters keywords or terms as a search query in a search engine,
blocks of text are yielded, known as “search results,” comprising the link to the
web page and snippets of content associated with the web page. The order of
prominence in which the search results appear are known as “page rank” or "page
rankings."
78. Google operates an Internet search engine, which allows Internet users
to locate Web sites that match the “keywords” or search terms they enter. A search
engine uses algorithms to process the keywords and produce a “search results”
page that displays links to the Web sites in the search engine’s database that match
the keywords. Links to the Web sites usually are displayed in order of decreasing
relevance, with the most relevant Web sites listed first. Google’s free search engine
processes hundred of millions of searches daily and covers billions of Web pages.
See, e.g., Google Inc. v. Am. Blind & Wallpaper Factory, Inc., 74 U.S.P.Q. 2d
1385 (N.D. Cal. 2005) at *6.
79. A person searches for a business or person by typing the business or
person as a query into a search engine such as Google, Yahoo, or Bing. She views
the pages of results returned by her search query, in decreasing order of
“relevance” as determined by the search engine’s proprietary algorithms.
80. What she sees is a powerful first impression of the subject of her
search query. Both the "search results" and "page rankings" are important
determinants for a user filtering the total amount of information available to the
public through Internet research.
81. An entire business of "search engine optimization" or “SEO” has
developed around the critical importance of these factors. Search engine
optimization concentrates on “organic” or “algorithmic” search results -- that is,
natural, unpaid, search results and page rankings (as opposed to “Sponsored
Amended Complaint - 24
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Results” that appear on the side of the main search results page and which are
influenced by the purchase of keywords). See Howard Declaration,.
82. Search engine optimization has been described as the business of
“help[ing] companies rank high on Internet search engines, such as Google, for
certain keywords, so that their prospective customers can find them on the web.”
See, e.g., Rhino Sports, Inc. v. Sport Court, Inc., 2007 U.S. Dist. LEXIS 32970 (D.
Ariz. May 3, 2007) at *7.
83. The size of the market for SEO services provided to companies
seeking to attract customers to their websites through optimizing content on the
Web about them for search engines such as Google, Bing or Yahoo was, in 2009, a
reported $14.6 billion.8
84. Courts have long recognized the importance of this first impression in
the context of “initial interest confusion” in trademark cases, whereby “the
defendant, by diverting or capturing the consumer’s initial attention, improperly
benefits from the goodwill that the plaintiff developed in its mark.”
85. In this case, the Defendants improperly assassinate the goodwill of the
subject in search results. They do not do this solely for altruistic reasons. They do
this for their own direct pecuniary gain, either (1) in the form of sales of goods and
services, or (2) in the form of increased Web traffic to its ROR Website, which
drives up the statistics in web analytics that partially determines the amount of
advertising revenue they receive from online advertisements. It is a win-win
situation for Defendants.
86. Thus, Defendants’ conduct herein must be viewed not only in terms of
what is displayed on the ROR Website itself, but also in terms of what Defendants
cause to be published in the “HTML” for each web page on the ROR Website in
view of the economics of advertiser-supported search engine business models.
8 Source: Crain’s Cleveland Business, “Search Engine Adviser’s Growth Easy to
Fathom.” (July 23, 2010).
Amended Complaint - 25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
87. By the time any content is published to the Web through the ROR
Website, Defendants have already acquired an exclusive, perpetual license to the
content.
88. Defendants are the owners of all Reports, rebuttals and comments by
the time anyone ever reads them. Defendant fills the content with paid
advertisements, links and sometimes paid endorsements or testimonials. Speech
on the ROR Website is thus commercial speech, and accorded a lower level of
protection under the First Amendment than purely expressive speech.
89. The HTML influences such things as the URL for the web page, how
prominently ROR Website web pages rank in search query results and which
information about Rip-off Report subjects appears in actual search results.
90. Defendants have taken many affirmative, deliberate actions in
designing and controlling the process by which HTML is generated for the over
500,000 unique web pages comprising the ROR Website that are deliberately
intended to improve the organic search results for web pages containing Rip-off
Reports when the subject’s name is search queried.
91. In particular, Defendants have been successful in maintaining
favorable page ranking, or “authority” from Google for the over 500,000 web
pages comprising the ROR Website.
F. Ripoff Report’s Authority with Google and Preference for Google
92. The ROR Website has been on the Internet since 1998.
93. Google is by far the most popular search engine for Web searches. In
July 2010, an estimated 69.7% of users use Google as a search engine, an
estimated 5.4% use Yahoo, and an estimated 4.8% use Microsoft’s Bing.
94. Some professional SEO consultants have openly speculated that
search engines Yahoo and Bing have changed their search algorithms to “punish”
or downgrade Ripoff Report within their organic search results, based on the
Amended Complaint - 26
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
observation that search queries conducted through Yahoo or Bing for a company or
individual will ordinarily return search results that rank web pages from the ROR
Website containing or referring to that company or individual relatively low.
95. However, Google’s search algorithms continue to give high
“authority” to web pages from the ROR Website. Having high “authority” means
a website’s individual web pages rank consistently highly in search query page
rankings.
96. Search queries conducted through Google for a company or individual
will ordinarily consistently return search results that rank web pages from the ROR
Website containing Rip-off Reports about that company or individual (the
“subject”) relatively highly, if any such Rip-off Reports exist.
97. For a small business or individual that has not deliberately engaged in
any SEO activities, if there is a Rip-off Report about that subject, a Google search
for that business or individual will frequently return search results that rank the
web page containing the Rip-off Report about that subject on the top page of
Google search results, if not as the first page rank.
G. Defendants’ Use of Domain Names To Influence Google Page Rankings
98. One of the factors that influence a particular web page’s ranking in
responses to Google search engine queries is the domain name and URL assigned
to it.
99. Defendants are responsible for the operating system, website design,
and user interface of the ROR Website. As designed, maintained and operated by
Defendants, the user interface of the ROR Website generates a unique URL for
each web page associated with each of the over 500,000 Rip-off Reports hosted
through the ROR Website.
100. A ROR Website user cannot actually choose a URL to assign to the
web page associated with a Rip-off Report. Defendants own and control all
Amended Complaint - 27
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
domains and sub-directories that direct through the ROR Website located at
ripoffreport.com. Only Defendants can create a web page with a URL that begins
with the domain name “http://www.ripoffreport.com/ . . . “
101. Ripoff Report designs and operates its user interface and website
operating system in a manner that it creates a unique URL for every ROR Website
web page that includes in the URL itself, the name of the subject of the Report,
sometimes repetitively.
102. This inclusion of the subject’s personal or business name in the
unique URL for a Report, always combined with the “ripoffreport.com” domain
names for Rip-off Report web pages influences Google’s search engine to give
higher page rankings to Reports than web pages located at URLs that do not
include such business or personal names in the URL.
103. For example, in Rip-off Report number 621543, a Report about a
company called “JobsforMoms.com” with the headline “JobsforMoms.com take
our money and run Internet” generates the domain name
http://www.ripoffreport.com/work-at-home/jobsformoms-com/jobsformoms-com-
take-our-mone-8e566.htm. This URL visibly incorporates the words “ripoff,”
"ripoffreport," "work," "work at home," "home," "jobsformoms", and
"jobsformoms.com" and would result in a higher page ranking for the web page
hosting Report 621543 in search queries for those words than a web page located
at a URL that did not include those words in the URL itself.
104. The Ripoff Report enterprise designs and operate their website
operating system, directories and subdirectories to generate unique URLs for
individual ROR Website web pages that include the names of companies or
individuals written about in the Reports. These URLs are created, controlled by
and owned by Defendants thus influence search engines to return higher page
rankings for ROR Website web pages displaying Rip-Off Reports about the subject
companies or individuals than other web pages that may mention the same
Amended Complaint - 28
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
company or individual but do not include the company or individual’s name in the
domain name.
105. Another place the Ripoff Report enterprise optimizes the Reports for
search engines are in the headlines. The “headlines” for many Rip-off Reports are
not written in standard English with ordinary grammar and syntax. In many
instances, they read like nonsense or gibberish. Such “headlines” frequently
include redundant, repetitive instances of a company or individual’s name.
106. For example, Defendants published to the Web on or about January
28, 2009 Rip-off Report number 417493 concerning Plaintiffs. A true and correct
reproduction of relevant portions of Report number 417493 and screen shot
showing the URL in the browser bar is reproduced below.
107. At all times relevant herein, Report number 417493 included text near
the top that repeats the name of Plaintiff Asia Economic Institute twice and also
includes the acronym “AEI.”
Amended Complaint - 29
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
“ Asia Economic Institute, AEI, WorldEcon: Raymond Mobrez And Iliana Llaneras Complete exploitation as an employee. Do not work for the Asia Economic Institute its a SCAM! West Los Angeles California.”
108. The URL for the web page on the ROR Website that displays Report
number 417493 is currently http://www.ripoffreport.com/employers/asia-
economic-instit/asia-economic-institute-aei-ef3f4.htm. This mirrors the double
inclusion of Plaintiff Asia Economic Institute’s name and the inclusion of the
acronym “AEI” that is also in the header.
109. The Ripoff Report enterprise changed the URL for Report 417493 at
some time between the date it was originally published and the present. In or
about January 2009, the URL for Report 417493 did not include so many repetitive
instances of Plaintiffs’ names. The Ripoff Report enterprise has since “optimized”
it for search engines.
110. Defendants updated Report number 417493 on or about May 21, 2010
at 3:30 p.m. Pacific Standard Time. Defendants continuously publish Report
number 417493 to the Web.
111. At some time between January 28, 2009 and the present, Defendants
caused the terms “Asia Economic Institute” to be repeated in the header of Report
number 417493 and in URL for the web page displaying Report number 417493 to
attract search engines to the web page of the Report for search queries for “Asia
Economic Institute” and to influence the search engines to rank the web page more
highly, rather than to express an idea to a reader that has already navigated to the
page displaying Report number 417493.
112. Many businesses and individuals of ordinary sophistication have not
purchased domain names consisting of their business or personal names. Many, if
not most, businesses and individuals or ordinary sophistication do not host content
at URLs or domain names that include their business or personal names.
Amended Complaint - 30
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
G. Defendants’ Preferential Treatment of Google and Founders in Reports
113. Ripoff Report actively and deliberately encourages users to prefer
Google as a search engine above others, invoking Google frequently by name.
Various portions of the ROR Website and form emails sent by Defendants on May
12, 2009 to Plaintiff Raymond Mobrez state, “Why do we win? – just do a Google
search for Communications Decency Act” or suggests recipients of emails to
“Google” for advertisers to demonstrate the validity of various propositions.
114. Ripoff Report also strongly protests on the ROR Website that it does
nothing to earn special, favorable treatment from Google.
115. As early as June 26, 2009, Defendants stated on their website: “Why
would a multi-billion dollar company like Google give preferential treatment to a
relatively small, controversial site like Ripoff Report? IT WOULDN'T, PEOPLE!
. . . Ripoff Report has never, ever (not now, and not in the past) done anything to
cause Google to rank our website higher in search results than other sites.”
Plaintiffs viewed such statements on June 26, 2009 and October 27, 2009.
116. Despite this protest, Defendants changed significantly the content of
Report numbers 607436, 517026 and 144627 in a manner that makes the Reports
more favorable to Google and its founders, Sergey Brin and Larry Evans.
117. Report number 607436 is a complaint about the Google Adwords
program. The purportedly user-submitted Report by “Chris” of Atascadero,
California, bears the headline beginning “Google Adwords Waste of Time
Internet” and states that the user’s ad performed much better on Yahoo.
118. On or about May 31, 2010 at 9:31 a.m. Pacific Standard Time
Defendants inserted in type of equal prominence on Report 607436, and
transmitted through the wires in interstate commerce through the ROR Website
the following false statement:
“NOTICE..!! this ripoff has nothing to do with Google search engine – many
rip-off businesses use the Google name to fool consumers.”
Amended Complaint - 31
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
119. The “Notice” on Report number 607436 transmitted by Defendants is
false on its face. The true facts are that AdWords is a program operated and owned
by Google, the same company as Google search engine. Google Adwords is sold at
http://google.com/ads/adwords2 and the Google search engine is located at
http://google.com. Both reside under the same top-level domain name, google.com
120. A true and correct copy of relevant sections of Rip-off Report Number
607436 is reproduced herein.
Amended Complaint - 32
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
121. Defendants also placed a false “*Notice” in between the title and
header of Rip-off Report Number 517026. A true and correct copy of relevant
portions of Rip-off Report Number 517026 is reproduced below:
Amended Complaint - 33
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
122. Report number 51706 is a complaint about the Google Adwords
program. The Report is dated Thursday, October 29, 2009 and indicates the last
posting was October 30, 2009. The purportedly user-submitted Report number
517026 by “Robert” of Painesville, bears a headline including “google Adwords
advertising ripped me off on sponsored search advertising Internet” and states that
“anyone thinking of trying Google adwords sponsored search advertising don’t Do
It.”
123. On or about October 30, 2009, at 4:26 p.m. Pacific Standard Time,
Defendants inserted in Report number 517026 and transmitted through the wires in
interstate commerce through the ROR Website, the following false statement, in
bold type of much larger point size than the body of the Report consisting of the
following “Notice”:
Amended Complaint - 34
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
“NOTICE..!! this ripoff has nothing to do with Google search engine –
many rip-off businesses use the Google name to fool consumers.”
124. The “Notice” added by Defendants on Report number 517206 is false
on its face.
125. The true facts are that Google does offer a keyword-triggered
advertising program called “AdWords.” See Google Inc. v. Am. Blind &
Wallpaper Factory, Inc., 2005 U.S. Dist. LEXIS 6228 (D. Cal. 2005) at *6.
126. Plaintiffs are informed and believe and thereon allege that Defendants
changed the names in Report number 144627 from “Sergey Brin” to “Soney
Bonoi.”
127. Defendant Magedson admitted that he suppressed or changed the
names in Rip-off Reports about Google Co-founder Sergey Brin because Google is
a company that Ripoff Report does business with and Magedson “was personally
told that [a user was] going to file phony reports about Google, anybody that [the
user] could find out that I was doing business with.”
128. Defendant Magedson admits that Sergey Brin is not a member of the
Corporate Advocacy Program. Therefore, Defendants added the additional material
in Report number 607436 and changed the names in Reports.
129. The true facts are that Ripoff Report does many things in creating,
formatting and publishing the web pages and associated HTML of content it
publishes to the Web that optimize its ranking with search engines, particularly
Google, and that influence the way search results appear.
///
///
///
///
///
///
Amended Complaint - 35
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
H. Defendants Alter Google Search Results for CAP Members
130. Defendants misrepresent their SEO efforts in part to appear authentic
to the public and add credibility to the Reports. The Ripoff Report enterprise then
offers certain ways that a subject can change or contribute to his or her own
Report. One is by joining CAP.
131. There are at least two ways to become a member of Defendants’
Corporate Advocacy Program. The first, “official” way is to engage in Defendants’
elaborate CAP application process.
132. Following the “official” method of enrolling for CAP, the potential
applicant jumps through various procedural hoops, makes various written factual
admissions, agrees to jurisdiction in Maricopa County, Arizona and eventually
compromises and waives substantive legal rights, including all claims against
Defendants.
133. The first step is to complete an intake questionnaire included on the
ROR Website, a sample of which is attached hereto as Exhibit “4” as it appeared
on July 26, 2010, and which is in substantially the same or same form as presented
by the Ripoff Report Enterprise to Plaintiffs at all relevant times herein (“First
Questionnaire”).
134. The First Questionnaire informs applicants that the program “requires
accepting responsibility for past problems and a commitment to making things
better.” It asks applicants, “Will you be willing to accept responsibility for
mistakes made?”
135. On information and belief, Plaintiffs allege that a CAP applicant must
answer this question in the affirmative, as well as describe information such as the
average dollar amount of its sale, to continue in the application process. Attached
hereto as Exhibit “5” are true and correct copies of electronic mails between one
such prospective CAP applicant, Tina Norris (“Norris”) and Magedson, including
those sent on March 9, 2010 at 8:23 p.m., May 20, 2010 at 7:55 a.m., and May 20,
Amended Complaint - 36
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
2010 at 10:31 a.m. On March 2, 2010, Norris filled in and submitted the
information requested by the Ripoff Report enterprise as responses to the First
Questionnaire through the ROR Website.
136. After receiving responses to the First Questionnaire, Defendants send
interested CAP applicants an email that advises applicants, inter alia, that they
have the option of filing a free rebuttal to any Rip-off Reports about them on the
ROR Website. Prospective CAP members receive an email from Defendants that
instructs them to copy and paste into a return email to Defendants the following
text:
“Dear Rip-off Report, I understand I could file rebuttals to the one or small
hand full of reports I have. I would still like to understand the program that
Rip-off Report has created to try and help businesses gain consumer trust,
whether or not the reports are true or false. I realize, with or without Rip-off
Report we would get complaints somewhere.
I have already filled out the form which is below for your review. Please
send me the RATES and whatever information you think I need to know
about the benefits of joining Rip-off Report Corporate Advocacy Program.”
On March 9, 2010 at 8:23 p.m., Magedson sent Norris an email with the above-
described instructions and requesting the above-described acknowledgement
(Exhibit “3”).
137. On May 20, 2010 at 7:55 a.m., Norris cut and pasted the requested
text into an email and emailed that reply back to Magedson, as requested in
Magdson’s March 9, 2010 email to Norris (Exhibit 3).
138. Thereafter, Defendants send prospective CAP applicants an email
with the subject “Corporate Advocacy Intake Form” with several attachments. The
attachments include (1) a document entitled “Corporate Advocacy Program
Description and Rates,” which contains more details about CAP, some additional
terms and conditions of CAP, some of the benefits of CAP, and a rate sheet setting
Amended Complaint - 37
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
forth the fees for CAP (“CAP Rate Sheet”), (2) a document entitled “Sample letter
we send to anyone that filed “a Ripoff Report.”
139. A true and correct copy of an actual “Corporate Advocacy Program
Description and Rates” and covering email that was sent from Defendant
Magedson to Tina Norris (“Norris”) on May 20, 2010 at 10:31 a.m. Central
Standard Time with the subject line “Corporate Advocacy Intake = TNT MGMT,
Tina Norris – 11 Reports? Our philosophy – the RATES” is attached hereto as
Exhibit “6” at pages 6 to 10 and incorporated herein by this reference.
140. A true and correct copy of the attachment to the May 20, 2010 10:31
a.m. email from Magedson to Norris consisting of solely the “Corporate Advocacy
Program Description and Rates” document is attached hereto as Exhibit “7.” The
first page of that document written and sent by the Ripoff Report enterprise states:
“NOTICE: Jurisdiction for this program is in Arizona, under the laws and
the state of Arizona. Doing this program, both parties agree they will have
no claims against each other, and jurisdiction for any disputes is in Arizona,
Maricopa County.”
Exhibit “7”
141. The cost of joining CAP is revealed in the Rate Sheet, entitled “Costs
for the Cap Program - $$$$.” A true and correct copy of the Rate Sheet portion of
the Corporate Advocacy Program Description and Rates emailed to Tina Norris by
Defendant Magedson on May 20, 2010 at 10:31 a.m. Central Standard Time is
attached hereto as Exhibit “8.”
142. The cost of joining the CAP program has two components, (1) an
initial charge, consisting of a “Programming” charge plus a flat fee based on the
number of reports existing at the time of joining the program, and (2) a mandatory,
36-month contract requiring “Monthly Monitoring Fee” payments of between by
the third of the month.
143. To join CAP, an applicant with 1 to 350 Reports must pay the initial
Programming charge is $7,500, plus a flat fee of between $600 to $140,000, plus a
Amended Complaint - 38
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
36-month contract to pay between $35 to $7,000 per month, depending on the total
number of Reports at the time of joining.
144. To join CAP, an applicants with 351 to 500 Reports must pay the
initial Programming charge is $8,500, plus a flat fee of between $122,850 to
$175,000, plus a 36-month contract to pay between $5,265 to $7,500 per month,
depending on the total number of Reports at the time of joining.
145. To join CAP, an applicant with 501 to 1000 Reports must pay the
initial Programming charge is $15,500, plus a flat fee of between $122,850 to
$175,000, plus a 36-month contract to pay between $7,515 to $15,000 per month,
depending on the total number of Reports at the time of joining..
146. To join CAP, an applicant with 1001 to 1500 Reports must pay the
initial Programming charge is $20,500 plus a flat fee of between $250,250 to
$375,000, plus a 36-month contract to pay between $10,010 to $15,000 per month,
depending on the total number of Reports at the time of joining.
147. If the applicant is more than 10 days late in paying a monthly
monitoring fee, a $50.00 late fee per day is assessed, which is incorporated into the
member’s currently, monthly fee.
148. Thereafter, another step that an applicant to CAP must take is to
provide more detailed information about its business to Defendants in the form of a
second questionnaire (“Second Questionnaire”). A true and correct copy of an
example of Defendants’ Second Questionnaire is attached hereto as Exhibit “9.”
149. The Second Questionnaire purports to be “Questions for the
Agreement” that Defendants will prepare based on the CAP applicant’s answers.
150. The email accompanying the Second Questionnaire explains that a
few days after successful completion of the Second Questionnaire, Defendants will
send an agreement for the CAP member’s signature (“CAP Agreement”).
151. Defendants represent that upon return of a signed CAP Agreement
with payment, Defendants will send the CAP member, inter alia, a “TEXT outline
so you can give us your proposed comments you would like us to use to talk about
Amended Complaint - 39
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
your company, explaining changes your company has made . . . and other positive
comments about your company.”
152. Defendants also promise that upon joining the CAP program (by
returning the signed CAP agreement with payment, Defendants will, inter alia,
send the CAP member “the 250 to 350 words you want us to put in front of the
Reports found on search engines.” Finally, The Ripoff Report enterprise gives as
an example, a Google search query “like this
one…http://www.google.com/search?hl=en&q=Blue+Coast+Financial&aq=f&aqi
=g8g-m1&aql=&gs_rfai=”
153. This Google search query for “Blue Coast Financial” yielded, as of
July 25, 2010, search results as reproduced in the screenshot below:
Amended Complaint - 40
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
154. As promised, joining CAP has turned the “negative” into a positive in
Google search results. The web page for Rip-off Report number 412338 still
remains in a high-ranking position three in page rank for a Google search query for
“Blue Coast Financial.” However, the viewer of the Google search query results
sees only the following preview snippets of text for the web page displaying Rip-
off Report Number 412338:
“Blue Coast Financial Review | Rip-off Report #412338
Apr 9, 2010 ... INVESTIGATION: Shawn Hull, Blue Coast Financial
Commitment to 100% client satisfaction, Feel confident and secure when
doing business with ...
www.ripoffreport.com/.../Blue-Coast-Financial/investigation-shawn-hull-
blu-cc86w.htm - Cached - Similar”
155. The reason this happens is that after a subject joins the CAP program,
the negative content in the Rip-off Report about the subject may not be removed,
but the negative comments are pushed so far down the “content” attribute of the
“head” section of the HTML code for the web page displaying the Report that the
negative content becomes virtually irrelevant to the search engines because of the
overwhelming “good” content placed in the first 90% of the metatag.
156. An example is shown below, for Ripoff Report’s advertiser,
Cash4Gold:
<meta name="keywords" content ="rip-off, ripoff, rip off, Cash4Gold, Corrupt Companies" />< meta name="description" content ="INVESTIGATION: Cash4Gold customers can feel safe confident & secure when doi ng business Cash4Gold & Albar Precious Metal Refining – Commitment to total customer satisfaction, positive rating for its customer support. Consumers best bet when looking to get Cash for Gold.*UPDATE ...Rip-of f Report Investigation: Cash4Gold pledges to resolve complaints. Commitment to Rip-off Report Corporate
Amended Complaint - 41
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Advocacy Program.- Executives stated " We are only as strong as our weakest link running a company of this size & volume you must adapt to your customers needs " Over $350,000 spent on new state of the art trackin g systems " /></ head >
157. In the above example, the new, custom “content” is shown after the
“content=” attribute inside the second set of meta “angle brackets” (between the
“<meta” and the “/>”. Although the previous negative part of the actual Report
may not be physically removed, it is effectively removed for search results because
of the change in meta tags and overwhelming page modification with positive
comments.
158. The actual Rip-off Report used as an example in the Second
Questionnaire Email, Report number 412338, appears to have been replaced by a
retraction from the original poster as of July 25, 2010. A true and correct copy of
Report Number 412338 as it appeared on July 25, 2010 currently is attached hereto
as Exhibit “10.”
159. Report Number 412338 provides in part:
“Dear Editor:
Please publish the following post:
I would like to retract my original post. I was completely wrong for posting
what I did about Blue Coast Financial.
After my post rip off report investigated the company and that made me
think about what I was actually doing. I would like to apologize to the
company and staff that tried to help me make this business successful.”
Exhibit 10. The “original post” referred to in Report 412338 is not visible.
160. Thus, the Ripoff Report enterprise promises, perhaps tacitly, that
membership in CAP will get the CAP member favorable, prominent search results,
and points the CAP applicant to an example where the original Report has
obviously been replaced. The only thing that appears to remain the same is the
number.
Amended Complaint - 42
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
161. A second, “unofficial” way to get into CAP is to file a lawsuit against
Defendants.
162. The Ripoff Report enterprise makes many representations of fact to
the public and to victims in furtherance of the Content Trolling Scheme.
163. Among Defendants’ most striking false representations, both on the
ROR Website on both June 26, 2009 and October 27, 2009, and in emails to
individuals seeking information about Rip-off Reports, is that “WE DO NOT
Remove any Rip-off Reports” and never removes reports for money.
164. ROR falsely claims that it never takes down reports, whether for
money or even if you sue, including currently on the Ripoff Report Website
“Ripoff Report . . . will not remove complaints even if you sue.” This quotation
appeared on the Website on June 26, 2009 and October 27, 2009. Plaintiffs viewed
the page containing this statement on those dates, and relied thereon.
165. This is absolutely false. Ripoff Report has taken down at least two
reports after litigation, and for a sum of over $100,000, in October 2009 and
December 2009.
166. The true facts are that Ripoff Report has removed Rip-off Reports,
and for substantial amounts of money. For substantial amounts of money, Rip-off
Report will disclaim Rip-off Reports, has permitted the subjects of Rip-off Reports
to write large portions of the contents, and has taken down Rip-off Reports.
167. A settlement agreement dated May 15, 2009 entered into and signed
by Defendants Xcentric and Magedson, on the one hand, and QED Media Group,
LLC, and Robert Russo, the subject of certain Rip-off Reports, on the other hand
(the “QED Agreement”) attached hereto as Exhibit “11”, provides in part:
a. “QED will pay to Xcentric the sum of Eleven Thousand dollars
($11,000) in the form of a cashier’s check;
b. . . . QED will execute a promissory note [to Xcentric] for the
principal sum of Ninety Thousand Dollars ($90,000) . . .
Amended Complaint - 43
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
d. Xcentric will insert into the beginning of the body of Report number 311070, Report number 254798, and Report number 261756 up to 250 words of content provided by QED.”
Exhibit 11.
168. Defendants induce subjects of negative reports, including Plaintiffs,
to take steps that effectively aggravate their injuries rather than helping them, by
posting rebuttals, while deterring them from exercising their rights by misleading
them as to Defendants’ track record of success in the courts.
169. ROR tells the subjects of its reports that they can tell their side of the
story if they file a “rebuttal.”
170. However, not all rebuttals are posted. Moreover, what ROR does not
tell subjects of reports is that filing a rebuttal is likely to increase the prominence
of the negative statements, and does so in a way that only the negative appears in
search results, not the positive. See Exhibit 2.
171. ROR also does not tell subjects that filing a rebuttal is financially
helpful to ROR because it increase the visitor traffic, amount of fresh content and
strengthens the overall authority of the site.
172. ROR also does not tell those to whom it advocates filing a rebuttal
that ROR then sells advertising links from the rebuttals. Thus, ROR is the ultimate
“troll” – a website that baits innocent people into defending themselves, and then
advertising against the fresh content contained in their rebuttals.
173. Furthermore, ROR claims that you can always file a free rebuttal. This
is false. Many rebuttals do not get posted, thus depriving subjects of the ability to
tell their side of the story and aggravating the harm to their reputation on the
Internet with devastating consequence to their business and personal lives.
Moreover, the claim that anyone can file a free rebuttal leads the public to infer
that the subject does not have a response.
174. Ripoff Report presents CAP and its Verified Safe program as
endorsements that a consumer can trust. This violates Section 5 of the FTC ACT,
15 U.S.C. § 45, and the Codes of Federal Regulations promulgated there under, 16
Amended Complaint - 44
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
C.F.R. Part 255.0 et seq. because Defendants fail to make material disclosures that
would affect consumer’s perception of Defendant’s endorsement of such programs
as paid advertisements and are not neutral and objective.
175. Finally, ROR claims that it has not done anything to get more
favorable search results with Google. Yet, ROR has altered content concerning
Google to maintain its good favor.
176. Together, these false statements and misrepresentations constitute a
scheme to defraud Plaintiffs and others similarly situated through the use of wire
communication as defined in 18 U.S.C. § 1343.
177. This pattern of wire fraud proximately caused the injuries to Plaintiffs
and others in their business or property as defined in 18 U.S.C. § 1962(c) and (d).
178. Desperate, the subjects of Reports are overwhelmed in the aftermath
of having a report go up about them.
179. The distress of a subject is well known among a business sector of
consultants who purport to have knowledge as to how to address the existence of a
Report.
180. Victims are deluged with calls, e-mails and faxes from services
soliciting fees to “repair” online reputation caused by the ROR.
181. Defendants intentionally used their Web site as a scheme to attempt to
obtain money from advertisers, Plaintiff and others by means of (1) the negative
Google search results generated from Rip-Off Reports and (2) false and
defamatory content acquired and distributed by Defendants.
182. Promising media attention and monetary compensation via class
action lawsuits, Defendants solicit purely negative content about businesses and
individuals and guide the creation of these complaints with their “Ripoff Revenge”
guidebook. In fact, the “Rip-off Report Do-It-Yourself Guide to Rip-off Revenge”
offers “step by step instructions” to readers looking to redress their grievances.
183. Defendants then label these businesses or individuals a “Ripoff” and
preclude publication of positive Reports.
Amended Complaint - 45
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
184. This biased presentation of these targets appears in Google search
results and are typically visible on the first page of the results page.
185. Using the pseudonym “Corporate Advocacy Program” (“CAP”),
Defendants charge as much as $7,500 to replace the negative search results with
positive affirmations. In addition, CAP members must pay a fee based on the
number of reports and a monthly monitoring fee per report times the reports
originally filed. The monthly monitoring fee agreement is for a minimum term of
36 months.
V.
DEFENDANTS’ VIOLATIONS OF 18 U.S.C. § 1343 (Wire Fraud)
A. Defendants Falsely Represent That “Reports Never Come Down”
186. Defendants make several, false and fraudulent statements of fact on its
Web site and in e-mails sent by Defendant Edward Magedson to Plaintiffs and
others similarly situated in a concerted effort to collect revenue from the sale of
their “Ripoff Revenge” guidebook, sale of their Corporate Advocacy Program,
advertisements, Internet traffic and link referrals.
187. These misrepresentations were made with the specific intent of: (1)
deceiving the public as to the legitimacy of their purported “consumer advocacy”
site; (2) deceiving the public as to the impartiality of their Rip-off Reports; (3)
deceiving the public as to safety of those businesses and individuals endorsed via
CAP; (4) deceiving the targets of the Ripoff Report enterprise into believing the
free rebuttal will be effective and helpful; and (5) deceiving the targets into
believing that legal action is futile because it cannot accomplish the goal of
removing Reports from Defendants’ database or the ROR Website, and that the
only way to remedy the harmful effects of Defendants’ Web site is through
payment to information technology consultants or the Defendants themselves.
Amended Complaint - 46
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
188. Defendants mislead those victimized on their website when they state
both on the site and in emails they “never take reports down.” They have
expressed this false statement in a number of ways, also stating that “reports never
come down” or “reports always stay up.”
189. At all times relevant hereto, Defendants state on the ROR Website
that they “never remove reports.”
190. Defendants state on the ROR Website, including on April 3, 2009 and
on July 26, 2010 that:
“Since the Ripoff Report was started in 1998, our policy has always
remained the same – we never remove reports.”
191. Currently, and at all relevant times hereto including specifically on
April 3, 2009, June 26, 2009 and July 26, 2010, the Ripoff Report enterprise makes
the following statements of fact through the ROR website:
i. “We . . . will not consider removal requests from anyone, including a
request which claims to be from the original author of a report.”
ii. “Ripoff Report . . . will not remove complaints even if you sue.”
iii. “We don’t write reports, and we don’t remove reports. PERIOD.”
192. A true and correct screen shot of the ROR Website containing these
statements of fact as it appeared on July 23, 2010 is attached hereto as Exhibit
“12.”
193. On May 12, 2009, Defendant Edward Magedson sent Plaintiff
Raymond Mobrez an e-mail containing the following false statements of fact:
i. “Rip-off Report is a permanent record.”
ii. “a Rip-off Report cannot be taken off.”
iii. “we have a uniform policy against removing reports.”
iv. “WE DO NOT Remove any Rip-off Reports”
v. “we do not remove a submitted Rip-off Report, and we never will.”
Amended Complaint - 47
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
vi. “Some people claim we remove reports for money, but that is just
plain false.”
Attached hereto as Exhibit “13” is a true and accurate copy of the email sent on
May 5, 2009 from Magedson to Mobrez making these false statements of fact.
194. On July 24, 2009, Defendant Edward Magedson sent Plaintiff
Raymond Mobrez an e-mail containing the following false statement of fact:
“We do not remove reports.”
195. The true facts are that Reports do, in fact, come down, for substantial
sums of money, and after a lawsuit, and that Defendants do write portions of
Reports in collaboration with CAP members or parties with whom they have
settled a lawsuit. Attached previously hereto as Exhibit “11” is a true and
accurate copy of a non-confidential settlement agreement between Xcentric
Ventures, LLC, Ed Magedson and QED Media Group, LLC and Robert Russo
whereby the parties agree that Defendants will not post any new reports regarding
QED Media Group, LLC and Robert Russo, if the contributor of the report “can
not prove to the reasonable satisfaction of Xcentric that he or she was an actual
customer of QED,” if not, “ the report will not be posted.” Defendants’ Counsel
has admitted that Reports have, on occasion, been removed from the ROR Web
site, including pursuant to the QED Agreement, and that Russo owed significant
sums of money to the Ripoff Report enterprise under the agreement providing for
such removal.
196. In an e-mail to Texas attorney, Kenton Hutcherson, dated October 29,
2009, Defendants’ counsel, Maria Speth, stated “After further reflection, and based
on issues beyond compliance with the settlement agreement, Ripoff Report has
decided to completely remove report number 510675. It was deactivated
Amended Complaint - 48
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
yesterday.” See Declaration of Kenton Hutcherson attached hereto as Exhibit
“14” ( including Speth’s October 29, 2009 email to Hutcherson).
197. On July 20, 2010, during a conference between both parties, counsel
for Defendants, Maria Speth, confirmed that two reports concerning Mr.
Hutcherson’s former client, QED Media Group, LLC, were removed on two
separate occasions. See Declaration of Daniel F. Blackert, attached hereto as
Exhibit “15.”
198. The false statements lead those victimized to believe they have very
limited courses of action. If they wish to mitigate the damage caused by these
reports, they must either pay Defendants to be in the CAP or pay an information
technology (“IT”) consultant to publish alternative online content to repair their
reputation via search engines.
199. Plaintiffs did take such steps. On October 24, 2009, Plaintiffs posted a
listing on Craigslist seeking an on site web product developer with SEO skills in
order to combat the defamatory reports. Plaintiffs paid $25.00 to post this
advertisement.
200. On March 6, 2009, Plaintiffs paid a Search Engine Optimization
consultant eight hundred and ninety ($890.00) dollars in connection with work
performed to mitigate the defamatory reports on ROR.
201. Again on March 27, 2009, Plaintiffs paid a Search Engine
Optimization consultant six hundred dollars ($600.00) in connection with work
performed to mitigate the defamatory reports on ROR.
202. On May 14, 2009, Plaintiffs paid a Search Engine Optimization
consultant eight hundred dollars ($800.00) in connection with work performed to
mitigate the defamatory reports on ROR.
203. Thereafter, Plaintiffs paid a Search Engine Optimization consultant
one hundred dollars ($100.00) in connection with work performed to mitigate the
defamatory reports on the ROR Website.
Amended Complaint - 49
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
204. Others have expended monies in order to mitigate and/or take down
the defamatory posts on the ROR.
205. In or around February 2010, Tina Norris, another victim of the
Content Trolling Scheme, paid $600 to Reputation Defender, and SEO consultant,
to repair the damage caused in Google search results by the Reports published by
the Ripoff Report enterprise in furtherance of the Content Trolling Scheme.
206. Another victim, Kathy Spano and her teenage daughter, residents of
the State of California, engaged an SEO consultant on May 18, 2010 for the
amount of $3,000 to repair the damage to the teenage daughter caused by the
posting of negative Reports in furtherance of the Content Trolling Scheme.
207. Another victim, attorney Laura Snoke, a resident of the State of
California, paid $3,500 upfront and $300 a month to maintain her own website and
blogs specifically to counteract the presence of the negative Reports in Google
searches. Nonetheless, clients and prospective clients mention to her the Reports.
A true and correct copy of the Declaration of Laura Snoke is attached hereto as
Exhibit “16.”
208. The Ripoff Report Enterprise also makes these false representations
that reports are never removed even if you sue, to intimidate the victims, deflect
litigation to the contributors, and reinforce the myth that Defendants are immune,
thus causing victims to sit on their rights while the statute of limitations runs, and
in some cases, as in Blockowicz, in fact claiming that the statute of limitations for
the underlying claim has run. The false statements are intended to, and in many
cases do, cause victims to believe they can only exercise legal process directed at
the contributors of the Reports to get ultimate relief. Defendants do not disclose
that they will disobey any injunction thus obtained.
209. On April 22, 2010, Ms. Spano’s teenage daughter currently has a
lawsuit pending in Superior Court for the State of California, Riverside County,
against Defendant Xcentric doing business as RipoffReport.com, Lombardo v.
RipoffReport.com, (RIC 10005777) for damages due to defamation and to prevent
Amended Complaint - 50
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
new Reports from being published. A true and correct copy of the Riverside
lawsuit is attached hereto as Exhibit “17”.
210. Likewise, Tina Norris incurred one hundred and thirty-four thousand
dollars $134,000 in attorneys fees’ in obtaining the identity of authors of Reports
and in obtaining injunctive relief against the contributor. Nonetheless, The Ripoff
Report enterprise continues to acquire and publish new content from the
contributor.
211. Another victim of false reports, attorney Peter Mallon, a resident of
the State of California, described that he was quoted a price of $2,995 from Quick
Rep Repair to commence work on repairing his online reputation. A true and
correct copy of the Declaration of Peter Mallon is attached hereto as Exhibit “18.”
212. Mallon was advised by the representative of Quick Rep Repair that
Defendant Magedson is generally in hiding to avoid service of lawsuits against
him.” See Exhibit 18 at ¶8. In addition to selling services, such consultants prey
upon the confusion, distress and panic induced in subjects of the Reports to
compound rumors and speculation about the degree to which the Ripoff Report
enterprise will respond to formal legal process or informal requests for help. Myths
and rumors regarding the efficacy and availability of court remedies are aggravated
and compounded by the legal advocacy published on the ROR Website to its
unsophisticated victims. Plaintiffs are informed and believe and thereon allege that
counsel for Defendants Xcentric and Magedson, Mari Crimi Speth, of Jaburg &
Wilk, will accept service of process for Defendants Xcentric and Magedson.
B. Defendants Falsely State That Victims Can File A Free Rebuttal and That Rebuttals Are Effective and Helpful.
213. Defendants also grossly overstate the ability of those targeted to file a
free rebuttal in response to negative Reports and grossly misrepresent the effect of
rebuttals as being helpful, rather than harmful.
Amended Complaint - 51
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
218. A number of people have unsuccessfully attempted to post rebuttals in
response to negative Reports about them, including, but not limited to Tina Norris
and Jan Smith.
219. Between July and November 2008, Tina Norris and a team of
employees attempted to file positive rebuttals to reports about her and her business,
TNT Management. Each rebuttal they submitted was in response to a different
Report. Of their approximately 40 submissions, the Ripoff Report enterprise
declined to post approximately half.
220. On January 19, 2010 and January 19, 2010 Jan Smith sent emails to
[email protected] complaining that rebuttals she has submitted to Reports
were not being posted. See Exhibit 19.
221. This misrepresentation that subjects can always file rebuttals creates
the illusion that Reports are balanced. It gives the public a sense that both positive
reports and negative content can be easily posted. This is not the case.
222. The illusion created by Defendants’ misrepresentations legitimizes the
complaints against Plaintiffs, thereby aggravating the harm done to the targeted
business or individual by the Content Trolling Scheme.
223. On May 5, 2009 at 11:48 a.m., Defendant Edward Magedson sent
Plaintiff Raymond Mobrez an e-mail containing the following statements of fact:
i. Best to respond to the report… Just file a rebuttal.. the truth
shall set you free.”
ii. “You can simply file a rebuttal and explain your side of the
story”
iii. “file a rebuttal to the nasty Report about you, state that you had
made a mistake in the past and explain how you’ve contacted (or are contacting if
the rebuttal is your sole method of contact) the author of the report to make things
right with them. . . We know it works.”
Amended Complaint - 52
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
iv. “We encourage you to post a rebuttal explaining your side of
the story, but we have a uniform policy against removing reports posted by
consumers.”
v. “we supply a REBUTTAL feature so that the company reported
has a chance to respond by agreeing, disagreeing, or apologizing and explaining
what will be done to fix the issue.”
vi. “file a rebuttal that is pleasant and, if you wish, mention that
you support this forum.”
A true and correct copy of Mr. Magedson’s May 5, 2009 at 11:48 a.m. email to Mr.
Mobrez is attached hereto.
224. In the May 5, 2009 email, Magedson adverts to his knowledge that the
public is finding Reports on search engines with the statement, “Consumers are
probably finding your business on search engines that would never even know
about you!”
225. Defendants do not disclose their ulterior motivation for advocating
their free, rebuttal service.
226. Filing a rebuttal actually hurts those victimized on the ROR website
and in search results more than it helps them. Filing a Rebuttal refreshes Google’s
search indexing, thereby potentially increasing content and visits for the ROR
Website site and Reports. This also raises the page ranking of the negative Report.
227. Rebuttals act as fresh content, refreshing the Reports with search
engines, particularly when Defendants add paid links to advertising the content in
the rebuttals. See Exhibit 2, ¶¶14-16.
228. Filing a rebuttal also requires registration and acceptance of ROR’s
terms of service, which contain an Arizona venue and choice of law that clause
Defendants may invoke should victims realize the effect of the Content Trolling
Scheme and wish to exercise their First Amendment right of petition against
Defendants in the courts.
Amended Complaint - 53
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
229. The aggravating effect of submitting a rebuttal is well observed. In or
about February 2010, Tina Norris paid $600 to an SEO consultant, Reputation
Defender, to successfully lower the ranking of the Reports targeting her from
number one to number four in Google page rankings. Thereafter, Norris also filed
a rebuttal to a Report. After she filed a rebuttal, the Report went back to the
number one position, rendering any work done by the consultant useless.
230. Plaintiffs did rely on the false statements on the ROR Website on
March 4, 2009 and April 3, 2009 that “the best thing you can do is to post a
rebuttal.”
231. On April 3, 2009, through counsel, Plaintiffs registered with the ROR
Website and thereafter posted a rebuttal.
232. Whereas on March 4, 2009, the Google search result for “Raymond
Mobrez” returned a Report as third in page rank, the Google search rank for
“Raymond Mobrez” currently returns a Report as the first in page rank.
C. Defendants Falsely State that they have never done anything to cause Google to rank their website higher in the search results.
233. Defendants falsely misrepresent to the public that “Ripoff Report has
never, ever (not now, and not in the past) done anything to cause Google to rank
our website higher in search results than other sites.” This quotation appeared on
the ROR website on June 26, 2009 and October 27, 2009.
234. ROR makes the following allegations on their webpage: In response
to the question “I head that the Ripoff Report pays Google to get higher rankings in
search results, is that true?” the Web site responds, “No. This is 100% false.”
These statements appeared on the ROR website on June 26, 2009 and October 27,
2009.
Amended Complaint - 54
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
i. “For the record – Ripoff Report has never, ever (not now, and
not in the past) done anything to cause Google to rank our website higher in search
results than other sites.” Attached hereto as Exhibit 20 is a true and accurate
printout from ROR’s website dated July 26, 2010 evidencing the above.
235. Ripoff Report has, in fact, done many things to support itself as a
business model and cause Google to rank postings higher by circumventing
punitive changes in algorithms. The website gives Google special treatment in
reports to maintain their high organic Google search authority and favorable
ranking.
236. However, Ripoff Report has actively written and published titles,
disclaimers, and comments to maintain favor with Google. They have changed the
meaning of reports concerning Google in substantial ways to achieve that
objective. For example, Defendants wrote a disclaimer that “this is not google.com
the search company” on a report posted about Google Adsense. Defendants have
changed the name of Sergey Brin, a Google founder, and editorialized about
reports on Brin and Larry Evans.
237. Plaintiffs were injured both by the public’s perception and in the form
of fees paid to IT consultants, loss of business over time and lost contract, both for
AEI’s business and lost real estate commissions on transactions for Mobrez and
Llaneras.
238. If Plaintiffs had known the true facts they would have sued ROR
earlier and not delayed in trying to resolve this issue by any means other than a
lawsuit, thereby taking early action to remedy the erosion in their business and
property interests and loss of valuable contracts.
///
///
///
///
Amended Complaint - 55
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
E. Defendants falsely state that they do no filter or suppress reports, unlike the Better Business Bureau.
239. Plaintiffs viewed the following statements on the Ripoff Report
website on August 12, 2009. The website also currently as of July 26, 2010
contains the following claims:
i. “Unlike the Better Business Bureau, Ripoff Report does not
hide reports of "satisfied" complaints. ALL complaints remain public and unedited
in order to create a working history on the company or individual in question.”
240. Plaintiffs viewed the following statements on the Ripoff Report
website on both June 26, 2009 and October 27, 2009. The website also currently
contains the following claims:
i. “First, this site is most effective when all complaints are
maintained and preserved so that over time patterns of truly bad business practices
are exposed. If we removed reports after a certain period of time, this would
provide consumers with less information to use when evaluating a company.
Unlike the Better Business Bureau (which deletes complaints after just 36 months),
we maintain a permanent record of all complaints. This ensures that our viewers
have more information rather than less.”
241. As mentioned above, Ripoff report does not post negative reports
about certain businesses, including negative reports about CAP members and
reports about CAP, itself and its agents. The public relies on these false
statements, giving more credence to the negative reports.
242. Moreover, Defendants will not post positive reports.
243. As set forth above, plaintiffs were injured by fees paid to IT
contractors and loss of business and contracts. If Plaintiffs had known the true facts
they would have sued ROR earlier and not delayed in trying to resolve this issue by
any means other than a lawsuit, thereby taking early action to remedy the erosion
in their business and property interests and loss of valuable contracts.
Amended Complaint - 56
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
F. Defendants Mislead The Public When They Present CAP Members As Safe, Reliable, And Trustworthy.
244. Defendants state that they investigate the truth to posts about CAP
members. They portray this process as reliable and accurate. Furthermore, they
portray CAP members as those businesses that are dedicated to improving their
customer service.
245. For example, ROR states:
i. “Rip-off Report Investigation: John Beck – Free And Clear –
Mentoring of America pledges to resolve complaints & address inquiries from the
past, and in the future. Commitment to Rip-off Report Corporate Advocacy
Business Remediation & Customer Satisfaction Program. Consumers can feel
confident & secure when doing business with John Beck – commitment to 100%
customer satisfaction – fulfilling commitment to provide excellent customer
service – safeguards for their clients.”
ii. “UPDATE Rip-off Report Investigation: John Beck Pledges To
Resolve Complaints. – commitment to 100% customer satisfaction – Consumers
can feel confident & secure when doing business with John Beck.” (A true and
correct copy of this page of ROR dated July 26, 2010 is attached hereto as Exhibit
“21.”
246. John Beck is currently being investigated by the Federal Trade
Commission. In addition, the FTC, on its website, advises individuals and
businesses that John Beck is running a scam and to not to business with him. (A
true and correct copy of the aforementioned page is attached hereto as Exhibit
“22.”
247. In fact, Defendants conduct CAP investigations strictly through the
email and Defendant Ed Magedson is the only one involved in the process. A true
Amended Complaint - 57
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
and correct copy of portions of the 30(b)(6) deposition of Ed Magedson evidencing
the above is attached to the Declaration of Daniel Blackert as Exhibit 15.
248. As set forth above, Plaintiffs were injured by fees paid to IT
contractors and loss of business and contracts.
249. If Plaintiffs had known the true facts they would have sued ROR
earlier and not delayed in trying to resolve this issue by any means other than a
lawsuit, thereby taking early action to remedy the erosion in their business and
property interests and loss of valuable contracts.
FIRST CLAIM FOR RELIEF
UNFAIR BUSINESS PRACTICES - CALIFORNIA BUSINESS
& PROFESSIONS CODE § 17200, et seq.)
(Against All Defendants)
250. Asia Economic Institute re-alleges and incorporates by reference all
preceding paragraphs as fully set forth herein.
251. Plaintiffs have standing pursuant to California Business and
Professional Code Section 17204.
252. Plaintiffs allege violations of California Business & Professions Code
§ 17200 on behalf of themselves and the public (Private Attorney General).
253. Defendants’ acts and practices as alleged herein constitute unlawful,
unfair, and/or fraudulent business practices in violation of California’s Unfair
Competition Law, Cal. Bus. & Prof. Code § 17200, et seq.
254. Defendants are engaged in unlawful business acts or practices by,
among other things:
255. Defendants have repeatedly and intentionally used their Websites as a
scheme t7 obtain money from AEI and other companies by means of false and
fraudulent representations made by the Defendant concerning the legitimacy of
Defendants’ Web site. This conduct amounts to wire fraud under 18 U.S.C. § 1343.
Amended Complaint - 58
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
256. Defendants are engaged in unfair business acts or practices by, among
other things:
257. Defendants have engaged in conduct the utility of which is
outweighed by the gravity of the consequences to the Plaintiffs and the public.
258. Defendants have engaged in conduct that is immoral, unethical,
unscrupulous, and substantially injurious to Plaintiff and the public.
259. Defendants have engaged in conduct that undermines and violates the
policies set out in 18 U.S.C. § 1962(c) and 18 U.S.C. § 1343.
260. Defendants are engaged in fraudulent business acts or practices by,
among other things:
a. Defendants represent themselves as consumer advocates. However,
this description is false and misleading for reasons stated above
including:
b. Defendants allow users to post personal complaints and air grievances
that fall well outside the definition of consumerism. Such complaints
include allegations of adultery, sexual assault, and pedophilia.
c. Defendants mislead the public into believing they have presented an
unbiased description of the targeted business or individual, However,
Defendants refuse to publish positive reports concerning these targets
and, on occasion, fail to publish rebuttals disputing the allegations
contained in the negative report.
d. Defendants label businesses or individuals enrolled in the Corporate
Advocacy Program as “verified safe” with insufficient investigation of
the veracity of this statements.
e. Defendants solicit false and defamatory complaints against Plaintiffs
and others so that they may profit from sales of their “Ripoff
Revenge” guidebook and membership in their Corporate Advocacy
Program.
Amended Complaint - 59
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
261. Defendants’ statements about products and services offered for sale
by participants in the CAP and Verified Safe Program are “endorsements” within
the meaning of Section 5 of the FTC Act, 15 U.S.C. § 45, because consumers are
likely to believe such statements reflects the opinions, beliefs, findings, or
experiences of a party other than the sponsoring advertiser.
262. Defendants fail to disclose material information that would be likely
to influence a consumer regarding the terms of Defendants’ endorsements and
testimonials under the Corporate Advocacy Program and Verified Safe Program.
263. Defendants have failed, and continue to fail, to disclose to consumers
in advertising the fact or the amount of material considerations paid to Defendants
for endorsing or “Verifying Safe” a business, in violation of Section 5 of the FTC
Act, 15 U.S.C. § 5, and Federal Trade Commission 16 C.F.R. Part 255.0 et seq. as
updated effective December 1, 2009 expressly to issue new Guides that confirm
Section 5 of the FTC Act applies to statements on blogs, and Internet communities.
264. Defendants are subject to liability for false or unsubstantiated
statements made through these endorsements.
265. Without injunctive relief, the Plaintiffs and others similarly situated
will continued to be harmed by the Defendants’ unlawful, unfair and fraudulent
business practices. In addition, Plaintiff is entitled to recover its costs of suit and
attorney.
SECOND CLAIM FOR RELIEF
COMMON LAW DEFAMATION
(Against All Defendants)
266. Asia Economic Institute re-alleges and incorporates by reference all
preceding paragraphs as fully set forth herein.
267. Defendants published defamatory materials on Defendants’ websites
regarding Plaintiffs.
Amended Complaint - 60
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
268. The publications contain false and misleading information and
have brought Plaintiffs into disrepute among members of the marketplace. In
addition, said defamatory comments have harmed Plaintiffs’ integrity, good-will,
reputation, and good name in the community.
269. Defendants knew or should have known that the defamatory posts
would cause serious harm to Plaintiffs. Defendants intended that the defamatory
posts impact the way the public views Plaintiffs, as well as their business.
270. Defendants knew that the publications included false information or
otherwise acted with reckless disregard of the truth or falsity contained in their
publications. Further, Defendants refuse to investigate the truth or falsity of such
statements to the detriment of Plaintiffs, as well as other businesses and
individuals.
271. Defendants’ publications damaged Plaintiffs’ business reputation and
have prejudiced it in the conduct of its business, and have deterred customers and
potential customers from dealing with it.
272. Plaintiffs have been injured in its reputation, business, and property by
reason of Defendants’ publications in an amount to be determined at trial.
THIRD CLAIM FOR RELIEF
DEFAMATION PER SE
(Against All Defendants)
273. Asia Economic Institute re-alleges and incorporates by reference all
preceding paragraphs as fully set forth herein.
274. Defendants published the statements attached hereto at “Exhibit 13.”
375. The Reports published by Defendants regarding Plaintiff are false and
were published with malice and reckless disregard for the truth or falsity of such
stories with intent to injure Plaintiff, its business reputation, and to illegally divert
prospective employees from the Plaintiff’s employ.
Amended Complaint - 61
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
376. Defendants do not verify the truth or accuracy of the stories contained
on their websites. Defendants publish the stories and hold Plaintiffs out to the
public as a “rip-off.”
377. The stories published and written by the Defendants contain false
information about the Plaintiffs’ business relationships and falsely allege the
Plaintiffs are engaged in criminal conduct. Such statements include that AEI is
“laundering money,” that AEI “lie cheat tax fraud,” “reduce pay illegally,” and is a
“SCAM.” These false statements constitute defamation per se under all applicable
laws.
278. The false statements of fact published on the Defendants’ website are
unambiguous and when read by the public searching for the Plaintiffs, the libelous
nature of such statements are clear. A reasonable person would have understood
these statements to mean that Plaintiffs have committed a crime.
379. As a direct and proximate result, Plaintiffs have been damaged in its
good name and reputation, has suffered great loss of its goodwill, has suffered
diminution in its value as a business entity, has lost prospective employees, and it
continue to suffer increasing damages on a daily basis. Defendants’ defamatory
publication entitles AEI to compensatory and punitive damages in an amount to be
determined at trial.
FOURTH CAUSE OF ACTION
FALSE LIGHT
(Against All Defendants)
280. Plaintiffs re-allege and incorporate by reference all preceding
paragraphs as fully set forth herein.
281. Defendants’ statements have placed Plaintiffs in a false light by
representing Plaintiffs as scam artists, criminals, racists, unqualified, and incapable
of providing a valuable service to the community. It is important to note that
Plaintiffs have provided valuable resources for the public and wish to continue to
Amended Complaint - 62
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
do so. However, Defendants so-called “rip-off reports” have tainted Plaintiffs
business, so much so that Plaintiffs have lost and continue to lose countless
business relationships and employees. In other words, the defamatory posts posted
on Defendants’ websites have halted Plaintiffs’ business.
282. The false light in which Plaintiffs have been placed as a result of the
Defendants’ statements would be highly offensive to a reasonable person in the
Plaintiffs’ position.
283. Defendants knew that the statements were false, or Defendants acted
in reckless disregard for the truth or falsity of those statements.
384. As a direct and proximate result of Defendants’ wrongful statements,
Plaintiffs have sustained harm to their business in an amount to be proven at trial.
SEVENTH CAUSE OF ACTION
INTENTIONAL INTERFERENCE WITH PROSPECTIVE
ECONOMIC RELATIONS
(Against All Defendants)
285. Plaintiff re-alleges and incorporates by reference all preceding
paragraphs as fully set forth herein.
286. AEI had valid contractual relationships with current and prospective
employees and had expected relationships with persons who, but for Defendant’s
libelous publications, would have entered into valid contractual relationships.
287. Defendants knew, when falsely and publicly making these defamatory
statements about the Plaintiffs, that Plaintiffs had these valuable contracts and
business expectancies.
288. Defendants intentionally and wrongfully interfered with these
relationships by knowingly publishing, creating, and soliciting negative, false, and
defamatory content in exchange for their own business profit.
Amended Complaint - 63
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
289. As a result of the Defendants’ wrongful conduct, the relationship
between the Plaintiffs and its employees has been disrupted. In fact, one
complainant claims that he was “considering starting a position at this company…”
until he “came home and googled his name, and found all these bad reports.” The
complaint further asserts that “as a result of these reports, [he is] going to blow him
off.”
290. As a direct and proximate results of the foregoing wrongful acts,
Plaintiffs have been damaged in their good name and reputation, have suffered
great loss of its goodwill, has suffered diminution in its value as a business entity,
has lost current as well as prospective employees, and it continues to suffer
damages. Plaintiffs have also lost valuable contracts. Defendants’ tortuous
interference with AEI’s business relations entitles AEI to compensatory and
punitive damages in an amount to be determined at trial.
EIGHTH CAUSE OF ACTION
NEGLIGENT INTERFERENCE WITH
PROSPECTIVE ECONOMIC RELATIONS
(Against All Defendants)
291. Plaintiff re-alleges and incorporates by reference all preceding
paragraphs as fully set forth herein.
292. AEI had valid contractual relationships with current and prospective
employees and had expected relationships with persons who, but for Defendant’s
libelous publications, would have entered into valid contractual relationships.
293. Defendants knew, when falsely and publicly making these defamatory
statements about the Plaintiffs, that Plaintiffs had these valuable contracts and
business expectancies.
294. Defendants negligently interfered with these relationships by
knowingly publishing and creating negative, false, and defamatory content in
exchange for their own business profit.
Amended Complaint - 64
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
295. The relationships between the Plaintiffs and its employees were
thereafter disrupted by the Defendants’ conduct.
296. As a direct and proximate results of the foregoing wrongful acts,
Plaintiffs have been damaged in their good name and reputation, have suffered
great loss of its goodwill, has suffered diminution in its value as a business entity,
has lost current as well as prospective employees, and it continues to suffer
damages. Plaintiffs have also lost valuable contracts. Defendants’ tortuous
interference with AEI’s business relations entitles AEI to compensatory and
punitive damages in an amount to be determined at trial.
NINTH CAUSE OF ACTION
NEGLIGENT INTERFERENCE WITH ECONOMIC RELATIONS
(Against All Defendants)
297. Plaintiff re-alleges and incorporates by reference all preceding
paragraphs as fully set forth herein.
299. AEI had a valid contractual relationships with current and prospective
employees.
300. Defendants knew, when falsely and publicly making these defamatory
statements about the Plaintiffs, that Plaintiffs had these valuable contracts.
301. Defendants intentionally and wrongfully interfered with these
relationships by knowingly publishing and creating negative, false, and defamatory
content in exchange for their own business profit. Defendants intentionally and
wrongfully caused these employees to breach their employment contracts with
Plaintiffs.
302. As a result of the Defendants’ wrongful conduct, the relationship
between the Plaintiffs and its employees has been disrupted. In fact, one
complainant claims that he was “considering starting a position at this company…”
until he “came home and googled his name, and found all these bad reports.” The
Amended Complaint - 65
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
complaint further asserts that “as a result of these reports, [he is] going to blow him
off.”
303. Defendant’s wrongful conduct is, therefore, a substantial factor in
causing Plaintiffs’ harm.
304. As a direct and proximate results of the foregoing wrongful acts,
Plaintiffs have been damaged in their good name and reputation, have suffered
great loss of its goodwill, has suffered diminution in its value as a business entity,
has lost current as well as prospective employees, and it continues to suffer
damages. Plaintiffs have also lost valuable contracts. Defendants’ tortuous
interference with AEI’s contractual relations entitles AEI to compensatory and
punitive damages in an amount to be determined at trial.
TENTH CAUSE OF ACTION
INJUNCTION
(Against All Defendants)
305. Plaintiffs re-allege and incorporate by reference all preceding
paragraphs as fully set forth herein.
306. Defendants have wrongfully and unlawfully solicited, developed, and
published on the Websites numerous false and misleading statements of fact
concerning AEI and its owners.
308. On or about May 5, 2009, Plaintiff Mobrez requested that defendants
remove these false and defamatory statements from the Ripoffreport.com website.
Defendants have refused, and still refuse, to remove false and misleading
statements after repeated requests by the Plaintiffs.
309. Plaintiffs have been and will continue to suffer immediate and
irreparable damage if Defendants are not enjoined during the pendency of this
lawsuit from disseminating or publishing false, misleading, and defamatory
comments regarding AEI, Mobrez, and Llaneras. The dissemination or publication
of these false, misleading, and defamatory posts continues to impact AEI’s
Amended Complaint - 66
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
business opportunities and dissuades prospective clients from doing business with
AEI.
310. Plaintiff has no adequate remedy at law for the injuries being suffered
as the Plaintiff will be forced to institute a multiplicity of suits to obtain adequate
compensation for their injuries.
311. There is a substantial likelihood that Plaintiffs will prevail on the
merits. Defendants have been repeatedly notified to cease and desist disseminating
or publishing these defamatory statements concerning AEI and its business, but
they have continued to host such statements on their Websites with the
understanding that such disparaging acts would be detrimental to the Plaintiffs.
312. Any harm associated with the entry of a preliminary injunction is
outweighed by the potential damage to AEI’s goodwill and reputation. Defendants
will not suffer monetary losses if they are forced to remove the false and
defamatory statements regarding the Plaintiffs and to remove references to
Plaintiffs from Defendants’ HTML.
313. Further, the public interest will be served by preventing the
dissemination of false and misleading statements about other businesses and
individuals.
314. Plaintiffs re-allege and incorporate by reference all preceding
paragraphs as fully set forth herein.
315. Plaintiffs further ask the Court to set its application for injunctive
relief for a full trial on the issue in this application, and after the trial, to issue a
permanent injunction against Defendants from disseminating or publishing false,
misleading, and defamatory statements concerning the Plaintiffs.
Amended Complaint - 67
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
ELEVENTH CAUSE OF ACTION
DECEIT CALIFORNIA CIVIL CODE §§ 1709, 1710)
(Against All Defendants)
316. Plaintiffs re-allege and incorporate by reference all preceding
paragraphs as fully set forth herein.
317. Cal. Civ. Code § 1709 prohibits willful deception of another with
intent to induce a detrimental change in position.
318. Cal. Civ. Code § 1710 provides in relevant part that “deceit…is either:
I. The suggestion, as a fact, of that which is not true, by one who does not believe it to be true;
II. The assertion, as a fact, of that which is not true, by one who does not believe it to be true;
III. The suppression of a fact, by one who is bound to disclose it, or who give information of other facts which are likely to mislead for want of communication of that fact; or,
IV. A promise, made without any intention of performing it.”
319. Defendants have and continue to violate Cal. Civ. Code § 1709 by
willfully deceiving Plaintiffs and others with the intent to induce a detrimental
change in their positive.
320. As described above, Defendants have violated and continue to violate
Cal. Civ. Code § 1710(1) by suggesting that: (1) they have not and will not remove
reports published on their Web site; (2) that filing a rebuttal has only a positive
effect; (3) that Defendants have done nothing to curry favor with Google; and (4)
that Defendants do not filter or suppress reports.
322. As described above, Defendants have violated and continue to violate
Cal. Civ. Code § 1710(2) by asserting that: (1) they have not and will not remove
reports published on their Web site; (2) that filing a rebuttal has only a positive
effect; (3) that Defendants have done nothing to curry favor with Google; and (4)
that Defendants do not filter or suppress reports.
Amended Complaint - 68
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
323. As described above, Defendants have violated and continue to violate
Cal. Civ. Code § 1710(3) by suppressing the fact that: (1) Defendants have
removed reports; (2) filing a rebuttal gives more prominence to the report on
Internet search results; (3) that Defendants have edited reports concerning Google
to maintain its good favor; (4) that Defendants will not post positive reports nor
will they publish reports concerning members of their CAP; and (5) CAP members
are not sufficiently investigated.
324. Plaintiffs were harmed by these allegations. Had they known the true
facts, Plaintiffs would not have hired IT consultants to repair their online
reputation and would not have filed a rebuttal with the Defendants.
325. Pursuant to Cal. Civ. Code § 1709, Defendants are liable for any
damage which was proximately caused to Plaintiffs as a result of Defendants’
deceit.
TWELFTH CAUSE OF ACTION
FRAUD
(CAL. CIVIL CODE § 1572)
326. Plaintiffs re-allege and incorporate by reference all preceding
paragraphs as fully set forth herein.
327. Cal. Civ. Code § 1572 provides that “[a]ctual fraud…consists of any
of the following acts, committed by a party to the contract, or with his connivance,
with intent to deceive another party thereto, or to induce him to enter into the
contract:
I. The suggestion, as a fact, of that which is not true, by one who does not believe it to be true;
II. The positive assertion, in a manner not warranted by the information the person making it, of that which is not true, though he believes it to be true;
Amended Complaint - 69
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
III. The suppression of that which is true, by one having knowledge or belief of the fact;
IV. A promise made without any intention of performing it; or V. Any other act fitted to deceive.
328. As described above, Defendants have violated and continue to violate
Cal. Civ. Code § 1572 by suggesting that: (1) that victims have the option of filing
a free rebuttal to the negative complaints; (2) that filing a rebuttal has only a
positive effect; (3) that Defendants have done nothing to curry favor with Google;
and (4) hat Defendants do not filter or suppress reports. At the time these
suggestions were made, Defendants did not believe this to be true.
329. As described above, Defendants have violated and continue to violate
Cal. Civ. Code § 1572 by asserting that: (1) by asserting that: they have not and
will not remove Reports published on the ROR Website; (2) that filing a rebuttal
has only a positive effect; (3) that Defendants have done nothing to curry favor
with Google; (4) that Defendants do not filter, change or suppress Reports. At the
time these assertions were made, Defendants did not believe this to be true.
330. As described above, Defendants have violated and continue to violate
Cal. Civ. Code § 1572 by asserting that: (1) by suppressing the fact that: (2) filing
a rebuttal gives more prominence to the Report on Internet search results; and (3)
that Defendants have edited reports concerning Google to maintain its good favor.
331. As described above, Defendants have violated and continue to violate
Cal. Civ. Code § 1572(5) by making false misrepresentations which were intended
to lure targeted businesses and individuals into paying to enroll in CAP and
otherwise put victims in a helpless, desperate position.
332. As a direct and proximate result of Defendants’ actions, Plaintiffs will
continue to suffer damages.
Amended Complaint - 70
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
WHEREFORE, Plaintiffs pray for judgment against defendants:
1. For general damages according to proof, including but not limited to the
following:
a. Legal fees incurred as a result of litigating the present case in the
amount of $21,700 to date;
b. Costs expended litigating the present case in the amount of $7,400
to date;
c. Amounts invested in assets, business, goodwill and operations of
Asia Economic Institute, LLC to date of at least:
d. Rented office space to date: $347,983
e. Phone and Internet Communications to date: $34,809
f. Move-in Costs to date: $31,950
g. Accrued start-up costs to date: $12,500
h. Miscellaneous expenses to date: $8,900
i. Amounts expended in traveling to Washington, DC and advocating
to representatives and lawmakers for a change in the statute in the
amount $2,500 to date
j. Salaries or fees paid to SEO Experts, IT consultants, LAMP
developers, software licenses, computer programmers and other
consultants, contractors and vendors or services to the business of
AEI;
k. Cost of registering and maintaining domain names and hosting
services and servers to host and operate the websites of AEI and
AEI’s educational, publishing and business missions;
l. Real estate transaction broker or license fees and commissions, and
other existing and prospective property interests in commercial
transactions, on which Mobrez and Llaneras would earn fees, and
Amended Complaint - 71
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
to which Plaintiffs Mobrez and Llaneras were entitled and were
lost by reason of Defendants’ acts complained of herein;
2. For special damages according to proof;
3. For punitive damages according to proof;
4. For a preliminary injunction requiring Defendants to remove from the
Website any false and defamatory statements concerning AEI or its
employees and prohibiting Defendants from later publishing such statements
on the Websites;
5. For a permanent injunction requiring Defendants to remove from the ROR
Website, both in Reports and in associated HTML, false, defamatory or
negative statements or keywords;
6. For prejudgment interest at the legal rate;
7. For costs of suit incurred herein;
8. For attorneys’ fees; and
9. For such other and further relief as the Court may deem just and proper.
DATED: August 15, 2010
By:
/s/ Daniel F. Blackert
DANIEL F. BLACKERT LISA J. BORODKIN Attorneys for Plaintiffs, Asia Economic Institute LLC, Raymond Mobrez, and Iliana Llaneras
Amended Complaint - 72
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
DEMAND FOR JURY TRIAL
Plaintiffs Asia Economic Institute LLC, Raymond Mobrez, and Iliana
Llaneras hereby demand a trial by jury.
DATED: August 15, 2010
By:
/s/ Daniel F. Blackert
DANIEL F. BLACKERT LISA J. BORODKIN Attorneys for Plaintiffs Asia Economic Institute LLC, Raymond Mobrez, and Iliana Llaneras
